Arbeitspapier
Calvo wages in a search unemployment model
RBC models with search unemployment and wage renegotiation generate too much wage volatility and too stable unemployment rate. Shimer (2004) shows that it is possible to reproduce a volatility of unemployment similar to that observed in actual economies by imposing full real wage rigidity. We use a similar model but with Calvo wage contracts and we obtain a microfounded equation of real wage rigidities. The models with full wage flexibility or full wage rigidity are obtained as particular cases. We show that a contract length of about six quarters fits best the observed cyclical properties of wages and unemployment.
- Language
-
Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 2521
- Classification
-
Wirtschaft
- Event
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Geistige Schöpfung
- (who)
-
Bodart, Vincent
Pierrard, Olivier
Sneessens, Henri R.
- Event
-
Veröffentlichung
- (who)
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Institute for the Study of Labor (IZA)
- (where)
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Bonn
- (when)
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2006
- Handle
- URN
-
urn:nbn:de:101:1-2008050291
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Bodart, Vincent
- Pierrard, Olivier
- Sneessens, Henri R.
- Institute for the Study of Labor (IZA)
Time of origin
- 2006
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