Logo
Munich Personal RePEc Archive

Productivity Shock and Optimal Monetary Policy in a Unionized Labor Market. Forthcoming: The Manchester School

Rossi, Lorenza and Mattesini, Fabrizio (2007): Productivity Shock and Optimal Monetary Policy in a Unionized Labor Market. Forthcoming: The Manchester School.

This is the latest version of this item.

[thumbnail of MPRA_paper_8775.pdf]
Preview
PDF
MPRA_paper_8775.pdf

Download (278kB) | Preview

Abstract

This paper presents a New Keynesian model characterized by labor indivisibilities, unemployment and a unionized labor market. The bargaining process between unions and firms introduces real wage rigidity and creates an endogenous trade-off between inflation and output stabilization. Under an optimal discretionary monetary policy a negative productivity shock requires an increase in the nominal interest rate. Moreover, an operational instrument rule will satisfy the Taylor principle, but will also require that the nominal interest rate does not necessarily respond one to one to an increase in the efficient rate of interest. The model calibration studies the response of the unionzed economy to productivity shocks under different monetary policy rules. Download Info

Available Versions of this Item

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.