Gradual wage-price adjustments, labor market frictions and monetary policy rules

Abstract:

In this paper the role of different types of labor market frictions in the dynamics of output and inflation is investigated. For this purpose, the Keynes-Goodwin model discussed in Chen et al. (2006) and Franke et al. (2006) is extended by a labor search and matching module along the lines of Mortensen et al. (1994). After estimating the resulting model with U.S. aggregate time series and comparing its dynamics with those of a VAR model, the performance of different types of monetary policy rules for inflation, and more generally, for macroeconomic stability is analyzed. © 2011 Elsevier B.V.

Año de publicación:

2012

Keywords:

• Wage and price inflation
• (D)AS-AD
• Monetary policy
• Labor market frictions

Fuente:

scopus