Labor market participation, unemployment and monetary policy

Arbeitspapier

In the present paper we examine how the introduction of endogenous participation in an otherwise standard DSGE model with matching frictions and nominal rigidities affects business cycle dynamics and monetary policy. The contribution of the paper is threefold: first, we show that the model provides a good fit for employment and unemployment volatility, as well as participation volatility and its correlation with output for US data. Second, we show that in such a model, and contrary to a model with exogenous participation, a monetary authority that becomes more aggressive in fighting inflation decreases the volatility of employment and unemployment. Finally, we show the role of search costs in shaping those results.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: MNB Working Papers ; No. 2011/4

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Business Fluctuations; Cycles ; Monetary Policy
• Subject: matching frictions ; endogenous participation ; monetary policy ; Neukeynesianische Makroökonomik ; Beschäftigung ; Arbeitslosigkeit ; Geldpolitik ; Konjunktur ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Campolmi, Alessia ; Gnocchi, Stefano
• Event: Veröffentlichung
• (who): Magyar Nemzeti Bank
• (where): Budapest
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/83610
• Last update: 10.03.2025, 11:42 AM CET