Identifying the Role of Labor Markets for Monetary Policy in an Estimated DSGE Model

Kai Christoffel, Keith Kuester and Tobias Linzert

No 146, Computing in Economics and Finance 2006 from Society for Computational Economics

Abstract: We focus on a quantitative assessment of rigid labor markets in an environment of stable monetary policy. We ask how wages and labor market shocks feed into the inflation process and derive monetary policy implications. We structurally model matching frictions and rigid wages in line with an optimizing rationale in a New-Keynesian closed economy DSGE model. We estimate the model using Bayesian techniques. We find that labor market structure is of prime importance for the business cycle, and for monetary policy. Yet shocks originating in the labor market itself do not contain important information for the conduct of stabilization policy

Keywords: Labor Market; wage rigidity; bargaining Bayesian estimation (search for similar items in EconPapers)
JEL-codes: E52 E58 J64 (search for similar items in EconPapers)
Date: 2006-07-04
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Citations: View citations in EconPapers (49)

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Related works:
Working Paper: Identifying the role of labor markets for monetary policy in an estimated DSGE model (2006)
Working Paper: Identifying the Role of Labor Markets for Monetary Policy in an Estimated DSGE Model (2006)
Working Paper: Identifying the role of labor markets for monetary policy in an estimated DSGE model (2006)
Working Paper: Identifying the role of labor markets for monetary policy in an estimated DSGE model (2006)
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