Authors

• Miguel Casares (mcasares@unavarra.es)
  Departamento de Economía, Universidad Pública de Navarra
• Antonio Moreno (antmoreno@unav.es)
  Facultad de Ciencias Económicas y Empresariales, Universidad de Navarra
• Jesús Vázquez (jesus.vazquez@ehu.es)
  Departamento FAE II, Universidad del País Vasco

Abstract
As one alternative to search frictions, wage stickiness is introduced in a New-Keynesian model to generate endogenous unemployment fluctuations due to mismatches between labor supply and labor demand. The effects on an estimated New-Keynesian model for the U.S. economy are: i) the Calvo-type probability on wage stickiness rises, ii) the labor supply elasticity falls, iii) the implied second-moment statistics of the unemployment rate provide a reasonable match with those observed in the data, and iv) wage-push shocks, demand shifts and monetary policy shocks are the three major determinants of unemployment fluctuations.

Classification JEL:C32, E30

Keywords:sticky wages, unemployment, business cycles, New-Keynesian models

Number of Pages:47

Creation Date:2010-09-22

Number:null/10