Transmission of recent shocks in a labour-DSGE model with wage rigidity

Meri Obstbaum, Sami Oinonen, Harri Pönkä, Juuso Vanhala and Lauri Vilmi

No 1/2023, BoF Economics Review from Bank of Finland

Abstract: In this paper we analyze features of the recent business cycle with a New Keynesian small open economy DSGE model with labour market frictions and wage rigidity. The model complements the existing analytical tools of the Bank of Finland by enabling detailed analysis of labour markets in a DSGE framework. We illustrate the properties of the model by presenting how recent shocks explain in flation and economic recovery in the euro area and Finland, with a specifi c emphasis on factors that are critical to explaining current labour market tightness.

Keywords: DGSE model; labour market frictions; wage rigidity (search for similar items in EconPapers)
JEL-codes: E24 E32 E37 F41 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-dge, nep-eec and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofecr:12023

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