Publication
Mar 2008
This publication explores the role of labor markets and its consequent effect on monetary policy amid macroeconomic shocks. The authors modify the Keynesian model by adding four variables - labor turnover costs, wage bargaining and unemployed and employed workers - to analyze labor market mechanisms. The report argues that the new Keynesian model can generate a hump shaped response to production output if the monetary shock includes a moderate autoregressive component.
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English (PDF, 27 pages, 431 KB) |
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Author | Wolfgang Lechthaler, Christian Merkl, Dennis Snower |
Series | Kiel Institute Working Papers |
Issue | 1409 |
Publisher | Kiel Institute for the World Economy |
Copyright | © 2008 Kiel Institute for the World Economy |