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Labor Selection, Turnover Costs and Optimal Monetary Policy (2012)
by
Ester Faia
,
Wolfgang Lechthaler
,
Christian Merkl
| Citations: | 1 - 0 self |
BibTeX
@MISC{Faia12laborselection,,
author = {Ester Faia and Wolfgang Lechthaler and Christian Merkl},
title = {Labor Selection, Turnover Costs and Optimal Monetary Policy},
year = {2012}
}
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Abstract
We study optimal monetary policy and welfare properties of a DSGE model with a labor selection process, labor turnover costs and Nash bargained wages. We show that our model implies inefficiencies which cannot be offset in a standard wage bargaining regime. We also show that the inefficiencies rise with the magnitude of firing costs. As a result, in the optimal Ramsey plan, the optimal inflation volatility deviates from zero and is an increasing function of ring costs.
