Wage stickiness and unemployment fluctuations: an alternative approach
Date
Authors
Director
Publisher
Project identifier
Abstract
Erceg, Henderson and Levin (2000, Journal of Monetary Economics) introduce sticky wages in a New-Keynesian general-equilibrium model. Alternatively, it is shown here how wage stickiness may bring unemployment fluctuations into a New-Keynesian model. Using Bayesian econometric techniques, both models are estimated with U.S. quarterly data of the Great Moderation. Estimation results are similar and provide a good empirical fit with the crucial difference that our proposal delivers unemployment fluctuations. Thus, second-moment statistics of U.S. unemployment are replicated reasonably well in our proposed New-Keynesian model with sticky wages. In the welfare analysis, the cost of cyclical fluctuations during the Great Moderation is estimated at 0.60% of steady-state consumption.
Description
Keywords
Department
Faculty/School
Degree
Doctorate program
item.page.cita
item.page.rights
CC Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0)
Los documentos de Academica-e están protegidos por derechos de autor con todos los derechos reservados, a no ser que se indique lo contrario.