Sequential bargaining in a New Keynesian model with frictional unemployment and staggered wage negotiation

Arbeitspapier

We consider a model with frictional unemployment and staggered wage bargaining where hours worked are negotiated for each period. The workers' bargaining power in the working time negotiations affects both unemployment volatility and inflation persistence. The closer to zero this parameter, (i) the more firms tend to adjust on the intensive margin, reducing employment volatility, (ii) the lower the effective workers' bargaining power for wages and (iii) the more important the hourly wage in determining the marginal cost. This set-up produces realistic labour market figures together with inflation persistence. Distinguishing the probability to bargain the wage rate for existing and new jobs, we show that the intensive margin helps reduce the new entrants' wage rigidity required to match observed unemployment volatility.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: NBB Working Paper ; No. 157

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Business Fluctuations; Cycles ; Monetary Policy ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: DSGE ; Search and Matching ; Nominal Wage Rigidity ; Monetary Policy ; Lohnrigidität ; Tarifverhandlungen ; Geldpolitik ; Lohnstückkosten ; Dynamisches Gleichgewicht ; Theorie ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): de Walque, Gregory ; Pierrard, Olivier ; Sneessens, Henri ; Wouters, Raf
• Event: Veröffentlichung
• (who): National Bank of Belgium
• (where): Brussels
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/144369
• Last update: 10.03.2025, 11:44 AM CET