The role of labor markets for euro area monetary policy

Christoffel, Kai; Kuester, Keith; Linzert, Tobias

doi:10.1016/j.euroecorev.2009.04.007

Cited by 140 publications

(141 citation statements)

References 49 publications

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“…Total vacancy costs amount to 1% of GDP ( c v / Ȳ = 0 . 01 ); this is larger than the value in Christoffel et al (2009) but it is in line with Andolfatto (1996) ; Gertler and Trigari (2009) and ( Sunakawa, 2015 ).…”

Section: Calibrationsupporting

confidence: 79%

“…Note that we abstract from another distortion that arises when the elasticity of matches to unemployment η is different from the worker bargaining weight γ . When η is high, a firm that posts a vacancy increases vacancy duration for all other ( Christoffel et al, 2009 ) λ 0.03 Job separation rate; ( Christoffel et al, 2009 ) c v / Ȳ 0.01 Steady state share of total vacancy posting cost in GDP; ( Andolfatto, 1996 ) firms, creating a congestion effect. This effect has to be offset by giving more bargaining power to workers, which discourages firms from posting vacancies.…”

Section: Definitionmentioning

confidence: 99%

“…6 , which is the mid-point of the range 0.5-0.7 proposed by Petrongolo and Pissarides (2001) . The worker's bargaining weight, γ , is also set to 0.6, which is close to the value suggested by Christoffel et al (2009) . 10 Following ( Christoffel et al, 2009 ), we set the vacancy filling rate, q , to 0.7 and the job separation rate, λ, to 0.03, in line with Euro area data on job flows.…”

Section: Calibrationmentioning

confidence: 99%

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Employment, hours and the welfare effects of intra-firm bargaining

Dossche

Lewis

Poilly

2019

Journal of Monetary Economics

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Bilateral bargaining between a multiple-worker firm and individual employees leads to overhiring. With a concave production function, the firm can reduce the marginal product by hiring an additional worker, thereby reducing the bargaining wage paid to all existing employees. We show that this externality is amplified when firms can adjust hours per worker as well as employment. Firms keep down workers' wage demands by reducing the number of hours per worker and the resulting labor disutility. Our finding is particularly relevant for European economies where hours adjustment plays an important role. R An earlier version of this paper was circulated under the title 'Employment, Hours and Optimal Monetary Policy'. We thank the associate editor, Antonella Trigari, and an anonymous referee for very useful comments and suggestions. We are grateful to

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Section: Calibrationsupporting

confidence: 79%

Section: Definitionmentioning

confidence: 99%

Section: Calibrationmentioning

confidence: 99%

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Employment, hours and the welfare effects of intra-firm bargaining

Dossche

Lewis

Poilly

2019

Journal of Monetary Economics

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“…The reaction of matches with respect to any changes in the job seekers rate, , is lower than the values common in the literature, such as studies by Němec (2013) or Christoffel et al (2009) who estimate this parameter to be around 0.8. However, my estimates also tilt this parameter in favor of unemployment in both shorter periods ( > 0.5).…”

Section: Structural Characteristicsmentioning

confidence: 56%

A DSGE Model of Slovakia with Frictional Labor Market and Monetary Regime Switch

Pápai

2017

Review of Economic Perspectives

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Abstract:The aim of this paper is to examine the dynamical and structural characteristics of Slovakia using a dynamic stochastic general equilibrium model augmented with search and matching mechanisms and other forms of frictions. I implement a switching mechanism to account for the monetary regime change in Slovakia in 2009. My focus lies in the investigation of labor market rigidities that affect the macroeconomic variables. I also examine the long term impact of the recession in 2009 on the Slovak economy. My findings are as follows. Firstly, based on parameter estimates, I identify significant labor market frictions present in the Slovak Republic. Secondly, my results capturing the historical evolution of key macroeconomic variables support the view that the recession in the examined small open economy was mainly caused by shocks originating in the foreign sector. Thirdly, the monetary authority can influence the labor market variables through its transmission channels relatively effectively; and lastly, I discovered that the recession decreased the Slovak economy's flexibility. While the results of estimations on two sub-samples are quite similar for most of the structural parameters, an increase in price and wage stickiness is observable.

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“…2 The use of search and matching frictions in business cycle models was pionereed by Merz (1995) and in the real business cycle (RBC) literature. More recently, the same labor market frictions have been studied in the New Keynesian model by Blanchard and Galí (2010), Christiano, Trabandt, and Walentin (2011), Christo¤el, Kuester, and Linzert (2009), , Groshenny (2009 and, Krause and Lubik (2007), , 2011), Sveen and Weinke (2009), Trigari (2009), and Walsh (2005), among many others.…”

Section: Model 21 the Representative Familymentioning

confidence: 98%

Mismatch Shocks and Unemployment During the Great Recession

Furlanetto¹,

Groshenny

2014

SSRN Journal

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We investigate the macroeconomic consequences of fluctuations in the effectiveness of the labor-market matching process with a focus on the Great Recession. We conduct our analysis in the context of an estimated medium-scale DSGE model with sticky prices and equilibrium search unemployment that features a shock to the matching efficiency (or mismatch shock). We find that this shock is not important for unemployment fluctuations in normal times. However, it plays a somewhat larger role during the Great Recession when it contributes to raise the actual unemployment rate by around 1.3 percentage points and the natural rate by around 2 percentage points. The mismatch shock is the dominant driver of the natural rate of unemployment and explains part of the recent shift of the Beveridge curve.

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The role of labor markets for euro area monetary policy

Abstract: 4Non-technical summary 5

Cited by 140 publications

References 49 publications

Employment, hours and the welfare effects of intra-firm bargaining

Employment, hours and the welfare effects of intra-firm bargaining

A DSGE Model of Slovakia with Frictional Labor Market and Monetary Regime Switch

Mismatch Shocks and Unemployment During the Great Recession

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