A Search Model of Unemployment and Inflation

Etienne Lehmann ()

No 2194, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, I introduce money in the standard labor-matching model (Mortensen and Pissarides 1999, Pissarides 2000). A double coincidence problem makes Fiat Money necessary as a medium of exchange. In the long-run, a rise in the rate of money growth leads to higher inflation and higher unemployment, so the long-run Phillips curve is not vertical. The optimal monetary growth rate decreases with the workers’ bargaining power, the level of unemployment benefits and the payroll tax rate.

Keywords: search-matching; unemployment; Friedman rule; inflation (search for similar items in EconPapers)
JEL-codes: E24 E52 J64 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2006-07
New Economics Papers: this item is included in nep-cba, nep-dge, nep-lab, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - published in: Scandinavian Journal of Economics, 2012, 114 (1), 245-266.

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Related works:
Journal Article: A Search Model of Unemployment and Inflation (2012)
Working Paper: A Search Model of Unemployment and Inflation" (2007)
Working Paper: A Search Model of Unemployment and Inflation (2006)
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