Equilibrium Unemployment, Job Flows, and Inflation Dynamics |
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Authors: | ANTONELLA TRIGARI |
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Institution: | Antonella Trigari;is Assistant Professor at the UniversitàBocconi, Milan, Italy (E-mail: ). |
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Abstract: | In order to explain the joint fluctuations of output, inflation and the labor market, this paper develops and estimates a general equilibrium model that integrates a theory of equilibrium unemployment into a monetary model with nominal price rigidities. The estimated model accounts for the responses of employment, hours per worker, job creation, and job destruction to a monetary policy shock. Moreover, search frictions in the labor market generate a lower elasticity of marginal costs with respect to output. This helps to explain the sluggishness of inflation and the persistence of output that are observed in the data. |
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Keywords: | E24 E32 E52 J64 |
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