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Inflation dynamics with labour market matching: Assessing alternative specifications
| Numéro | 38 |
| Date | May 2009 |
| Auteur | Kai Christoffel, James Costain, Gregory De Walque, Keith Kuester, Tobias Linzert, Stephen Millard and Olivier Pierrard |
| Résumé | This paper reviews recent approaches to modeling the labour market and assesses their implications for inflation dynamics through both their effect on marginal cost and on price-setting behavior. In a search and matching environment, we consider the following modeling setups: right-to-manage bargaining vs. efficient bargaining, wage stickiness in new and existing matches, interactions at the firm level between price and wage-setting, alternative forms of hiring frictions, search on-the-job and endogenous job separation. We find that most specifications imply too little real rigidity and, so, too volatile inflation. Models with wage stickiness and right-to-manage bargaining or with firm-specific labour emerge as the most promising candidates.
JEL Classification System: E31,E32,E24,J64 Keywords: Inflation Dynamics, Labour Market, Business Cycle, Real Rigidities. |
| Téléchargement | Cahier d'étude 38 (pdf, 540 KByte) |
