Labor Market Search, Inflation and Emloyment Dynamics

Günes Kamber () and Chahnez Boudaya
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Günes Kamber: Economics CES, University of Paris 1

No 415, Computing in Economics and Finance 2006 from Society for Computational Economics

Abstract: This paper tries to assess which kind of real rigidities can enhance our understanding of inflation and labor market dynamics in a dynamic general equilibrium model with capital and labor market frictions and nominal price rigidities. We particularly introduce real wage rigidities through non-separable preferences as suggested by Chéron and Langot (2004). This aims to obtain weaker procyclical real wage in the lines of recent literature. We show that the real rigidities, namely habit formation in consumption and capital adjustment cost improve our understanding of inflation dynamics and persistent real effects of monetary shocks. In addition, we investigate the effects of positive technology shocks on the labor market dynamics.

Keywords: labor market; new keynesian model; search and matching (search for similar items in EconPapers)
JEL-codes: E24 E3 E64 (search for similar items in EconPapers)
Date: 2006-07-04
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Persistent link: https://EconPapers.repec.org/RePEc:sce:scecfa:415

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