Logo
Munich Personal RePEc Archive

Unemployment, Inflation and Monetary Policy in a Dynamic New Keynesian Model with Hiring Costs

Abbritti, Mirko and Boitani, Andrea and Damiani, Mirella (2006): Unemployment, Inflation and Monetary Policy in a Dynamic New Keynesian Model with Hiring Costs. Published in: HEI Working Paper No. 07/2007 (January 2007): pp. 1-33.

[thumbnail of MPRA_paper_2252.pdf]
Preview
PDF
MPRA_paper_2252.pdf

Download (350kB) | Preview

Abstract

The dynamic general equilibrium model with hiring costs presented in this paper delivers involuntary unemployment in the steady state and involuntary fluctuations in unemploy- ment. After calibrating the model, through simulations we are able to show that our model with labour market imperfections outperforms the standard NK model as for the persis- tence of responses to monetary shocks. Besides, the model can be easily used to assess the impact of di¤erent market imperfections on both the steady state and the dynamics of the economy. We are also able to show how two economies, differing in their degrees of imperfection, react to policy or non policy shocks: a rigid economy turns out to be less volatile than a flexible economy. Something that reflects the actual experience of the US (flexible) and European (rigid) economies.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.