Detalle Publicación

ARTÍCULO
Labour Market Imperfections, 'Divine Coincidence' and Volatility of Employment and Inflation
Autores: Abbritti, Mirko; Boitani, Andrea; Damiani, Mirella
Título de la revista: REVIEW OF ECONOMICS AND INSTITUTIONS
ISSN: 2038-1379
Volumen: 3
Número: 1
Páginas: 1 - 37
Fecha de publicación: 2012
Resumen:
The dynamic general equilibrium model with hiring costs presented in this paper delivers involuntary unemployment in the steady state as well as involuntary fluctuations in unemployment. The existence of hiring frictions introduces externalities that, in turn, entail the breakdown of the "divine coincidence" without assuming real wage rigidity. We are able to show that our model with labour market imperfections outperforms the standard New Keynesian model as for the persistence of responses to monetary shocks. We also attempt an analysis of the volatility of two economies, differing in their "degrees of imperfection". It turns out that "rigid" economies exhibit less unemployment volatility and more inflation volatility than "flexible" economies