Monetary Persistence and the Labor Market: A New Perspective

Wolfgang Lechthaler, Christian Merkl and Dennis Snower

No 2935, CESifo Working Paper Series from CESifo

Abstract: In this paper we propose a novel way to model the labor market in the context of a New-Keynesian general equilibrium model, incorporating labor market frictions in the form of hiring and firing costs. We show that such a model is able to replicate many important stylized facts of the business cycle. The reactions to monetary and real shocks become much more sluggish. Job creation and job destruction are negatively correlated. And the volatility of unemployment is much larger than in the standard search and matching model.

Keywords: monetary persistence; labor market; hiring and firing costs (search for similar items in EconPapers)
JEL-codes: A00 A10 A11 E24 E32 E52 J23 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (70)

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Related works:
Journal Article: Monetary persistence and the labor market: A new perspective (2010)
Working Paper: Monetary Persistence and the Labor Market: A New Perspective (2010)
Working Paper: Monetary Persistence and the Labor Market: A New Perspective (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2935

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