Casares Polo, MiguelMoreno Pérez, AntonioVázquez, Jesús2016-05-102016-05-102009https://academica-e.unavarra.es/handle/2454/20636Erceg, 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.35 p.application/pdfengCC Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0)Wage rigidityPrice rigidityUnemploymentinfo:eu-repo/semantics/workingPaperinfo:eu-repo/semantics/openAccess