Inflation dynamics with labour market matching: assessing alternative specifications

Kai Christoffel, James S. Costain (), Grégory de Walque (), Keith Kuester (), Tobias Linzert (), Stephen Millard () and Olivier Pierrard ()
Additional contact information
Keith Kuester: Federal Reserve Bank of Philadelphia, Ten Independence Mall, Philadelphia, PA 19106-1574, USA., http://www.philadelphiafed.org/index.cfm
Tobias Linzert: European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany., http://www.ecb.europa.eu/home/html/index.en.html
Stephen Millard: Bank of England, Threadneedle Street, London EC2R 8AH, UK., http://www.bankofengland.co.uk/

No 1053, Working Paper Series from European Central Bank

Abstract: This paper reviews recent approaches to modeling the labour market and assesses their implications for inflation dynamics through both their effect on marginal cost and on price-setting behaviour. In a search and matching environment, we consider the following modeling setups - right-to-manage bargaining vs. efficient bargaining, wage stickiness in new and existing matches, interactions at the firm level between price and wage-setting, alternative forms of hiring frictions, search on-the-job and endogenous job separation. We find that most specifications imply too little real rigidity and, so, too volatile inflation. Models with wage stickiness and right-to-manage bargaining or with firm-specific labour emerge as the most promising candidates. JEL Classification: E31, E32, E24, J64.

Keywords: Inflation Dynamics; Labour Market; Business Cycle; Real Rigidities. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-dge, nep-lab and nep-mac
Date: 2009-05
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Related works:
Working Paper: Inflation dynamics with labour market matching: assessing alternative specifications (2009)
Working Paper: Inflation dynamics with labour market matching: assessing alternative specifications (2009)
Working Paper: Inflation dynamics with labour market matching: assessing alternative specifcations (2009)
Working Paper: Inflation dynamics with labour market matching: assessing alternative specifications (2009)
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