dc.contributor.author | Blanchard, Olivier Jean | |
dc.contributor.author | Gali, Jordi | |
dc.date.accessioned | 2012-07-31T12:55:16Z | |
dc.date.available | 2012-07-31T12:55:16Z | |
dc.date.issued | 2010-04 | |
dc.identifier.issn | 1945-7715 | |
dc.identifier.uri | http://hdl.handle.net/1721.1/71906 | |
dc.description.abstract | We construct a utility-based model of fluctuations with nominal rigidities and unemployment. We first show that under a standard utility specification, productivity shocks have no effect on unemployment in the constrained efficient allocation. That property is also shown to hold, despite labor market frictions, in the decentralized equilibrium under flexible prices and wages. Inefficient unemployment fluctuations arise when we introduce real-wage rigidities. As a result, in the presence of staggered price setting by firms, the central bank faces a trade-off between inflation and unemployment stabilization, which depends on labor market characteristics. We draw the implications for optimal monetary policy. | en_US |
dc.description.sponsorship | National Science Foundation (U.S.) (SES 0617744) | en_US |
dc.language.iso | en_US | |
dc.publisher | American Economic Association | en_US |
dc.relation.isversionof | http://dx.doi.org/10.1257/mac.2.2.1 | en_US |
dc.rights | Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. | en_US |
dc.source | American Economic Association | en_US |
dc.title | Labor Markets and Monetary Policy: A New Keynesian Model with Unemployment | en_US |
dc.type | Article | en_US |
dc.identifier.citation | Blanchard, Olivier, and Jordi Galí. 2010. "Labor Markets and Monetary Policy: A New Keynesian Model with Unemployment." American Economic Journal: Macroeconomics, 2(2): 1–30. Copyright 2010 American Economic Association. | en_US |
dc.contributor.department | Massachusetts Institute of Technology. Department of Economics | en_US |
dc.contributor.approver | Blanchard, Olivier Jean | |
dc.contributor.mitauthor | Blanchard, Olivier Jean | |
dc.relation.journal | American Economic Journal: Macroeconomics | en_US |
dc.eprint.version | Final published version | en_US |
dc.type.uri | http://purl.org/eprint/type/JournalArticle | en_US |
eprint.status | http://purl.org/eprint/status/PeerReviewed | en_US |
dspace.orderedauthors | Blanchard, Olivier; Galí, Jordi | en |
dc.identifier.orcid | https://orcid.org/0000-0001-8142-5016 | |
mit.license | PUBLISHER_POLICY | en_US |
mit.metadata.status | Complete | |