Citation

Discussion Paper Details

Please find the details for DP7650 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Monetary Persistence and the Labor Market: A New Perspective

Author(s): Wolfgang Lechthaler, Christian Merkl and Dennis J. Snower

Publication Date: January 2010

Keyword(s): Business Cycle Statistics, Hiring and Firing Costs, Labor Market and Monetary Persistence

Programme Area(s): International Macroeconomics and Labour Economics

Abstract: In this paper we propose a novel way to model the labor market in the context of a New-Keynesian general equilibrium model, incorporating labor market frictions in the form of hiring and firing costs. We show that such a model is able to replicate many important stylized facts of the business cycle. The reactions to monetary and real shocks become much more sluggish. Job creation and job destruction are negatively correlated. And the volatility of unemployment is much larger than in the standard search and matching model.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7650

Bibliographic Reference

Lechthaler, W, Merkl, C and Snower, D. 2010. 'Monetary Persistence and the Labor Market: A New Perspective'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7650