Vogel, Lukas (2008): Interacting nominal and real labour market rigidities.
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This note analyses the interaction between nominal wage stickiness and costly employment adjustment in a small closed-economy New Keynesian model with simple rule-based or optimal monetary policy. The results show (1) the costs of nominal and real rigidity to depend on the policy regime, (2) optimal policy to substantially contain the welfare loss, and (3) the absence of quantitatively important secondbest interaction, suggesting that reducing rigidity along one dimension alone does not risk reducing overall welfare.
|Item Type:||MPRA Paper|
|Original Title:||Interacting nominal and real labour market rigidities|
|Keywords:||Wage stickiness; employment adjustment costs; second best|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles
E - Macroeconomics and Monetary Economics > E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E24 - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General
|Depositing User:||Lukas Vogel|
|Date Deposited:||22. Aug 2010 00:39|
|Last Modified:||02. Mar 2013 12:53|
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Interacting nominal and real labour market rigidities. (deposited 28. Nov 2008 01:13)
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