Shocks and frictions under right-to-manage wage bargaining: a transatlantic perspective

Agostino Consolo and Matthias Hertweck

Working papers from Faculty of Business and Economics - University of Basel

Abstract: This paper introduces staggered right-to-manage wage bargaining into a New Keynesian business cycle model. Our key result is that the model is able to generate persistent responses in output, inflation, and total labor input to both neutral technology and monetary policy shocks. Furthermore, we compare the model's dynamic behavior when calibrated to the US and to an European economy. We find that the degree of price rigidity explains most of the differences in response to a monetary policy shock. When the economy is hit by a neutral technology shock, both price and wage rigidities turn out to be important.

Keywords: Business Cycles; labor market search; wage bargaining; inflation (search for similar items in EconPapers)
JEL-codes: E24 E31 E32 J64 (search for similar items in EconPapers)
Date: 2010-02-02
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:bsl:wpaper:2010/01

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