A Note on Trend Growth, Unemployment and Optimal Monetary Policy

Artikel

We analyze the implications of trend growth for optimal monetary policy in the presence of search and matching unemployment. We show that trend growth interacts importantly with the inefficiencies stemming from the labor market. Higher trend growth exacerbates the inefficiencies of the labor market and therefore calls for larger deviations from price stability. Our analysis implies that lower trend growth reduces not only the level but also the optimal volatility of the nominal interest rate.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Macroeconomic Dynamics ; ISSN: 1469-8056 ; Volume: 23 ; Year: 2019 ; Issue: 4 ; Pages: 1703-1719 ; Cambridge: Cambridge University Press

Classification and Topics

• Classification: Wirtschaft
• Subject: trend growth ; unemployment ; optimal monetary policy ; labor market frictions ; policy trade-of

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lechthaler, Wolfgang ; Tesfaselassie, Mewael F.
• Event: Veröffentlichung
• (who): Cambridge University Press ; ZBW - Leibniz Information Centre for Economics
• (where): Cambridge
• (when): 2019

Further information

• DOI: doi:10.1017/S1365100517000402
• Handle: http://hdl.handle.net/10419/266167
• Last update: 10.03.2025, 11:43 AM CET