Monetary persistence and the labor market: A new perspective

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2935

Classification and Topics

• Classification: Wirtschaft ; General Economics and Teaching ; General Economics: General ; Role of Economics; Role of Economists; Market for Economists ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Business Fluctuations; Cycles ; Monetary Policy ; Labor Demand
• Subject: monetary persistence ; labor market ; hiring and firing costs ; Geldpolitik ; Schock ; Hysteresis ; Ungleichgewichtstheorie ; Arbeitsmobilität ; Kosten ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lechthaler, Wolfgang ; Merkl, Christian ; Snower, Dennis J.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/30747
• Last update: 10.03.2025, 11:45 AM CET