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dc.contributor.authorBlanchard, Olivier Jean
dc.contributor.authorGali, Jordi
dc.date.accessioned2012-07-31T12:55:16Z
dc.date.available2012-07-31T12:55:16Z
dc.date.issued2010-04
dc.identifier.issn1945-7715
dc.identifier.urihttp://hdl.handle.net/1721.1/71906
dc.description.abstractWe 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.sponsorshipNational Science Foundation (U.S.) (SES 0617744)en_US
dc.language.isoen_US
dc.publisherAmerican Economic Associationen_US
dc.relation.isversionofhttp://dx.doi.org/10.1257/mac.2.2.1en_US
dc.rightsArticle 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.sourceAmerican Economic Associationen_US
dc.titleLabor Markets and Monetary Policy: A New Keynesian Model with Unemploymenten_US
dc.typeArticleen_US
dc.identifier.citationBlanchard, 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.departmentMassachusetts Institute of Technology. Department of Economicsen_US
dc.contributor.approverBlanchard, Olivier Jean
dc.contributor.mitauthorBlanchard, Olivier Jean
dc.relation.journalAmerican Economic Journal: Macroeconomicsen_US
dc.eprint.versionFinal published versionen_US
dc.type.urihttp://purl.org/eprint/type/JournalArticleen_US
eprint.statushttp://purl.org/eprint/status/PeerRevieweden_US
dspace.orderedauthorsBlanchard, Olivier; Galí, Jordien
dc.identifier.orcidhttps://orcid.org/0000-0001-8142-5016
mit.licensePUBLISHER_POLICYen_US
mit.metadata.statusComplete


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