DSGE; search and matching; nominal wage rigidity; monetary policy
Abstract :
[en] We consider a model with frictional unemployment and staggered wage bargaining where
hours worked are negotiated every period. The workers’ bargaining power in the hours
negotiation affects both unemployment volatility and inflation persistence. The closer to zero
this parameter, (i) the more firms adjust on the intensive margin, reducing employment
volatility, (ii) the lower the effective workers’ bargaining power for wages and (iii) the more
important the hourly wage in the marginal cost determination. This set-up produces realistic
labor market statistics together with inflation persistence. Distinguishing the probability to
bargain the wage of the existing and the new jobs, we show that the intensive margin helps
reduce the new entrants wage rigidity required to match observed unemployment volatility.
Disciplines :
Macroeconomics & monetary economics
Identifiers :
UNILU:UL-ARTICLE-2013-101
Author, co-author :
De Walque, Gregory; National Bank of Belgium, Research Department
Pierrard, Olivier; BCL - Banque Centrale du Luxmbourg
Sneessens, Henri ; Université Catholique de Louvain - UCL > IRES - Institut de recherches économiques et sociales
Wouters, Raf; National Bank of Belgium, Research Department
Language :
English
Title :
Sequential bargaining in a New Keynesian model with frictional unemployment and staggered wage negotiation
Publication date :
2009
Journal title :
Annales d'Economie et de Statistique
ISSN :
0769-489X
Publisher :
Association pour le développement de la recherche en économie et en statistique, Paris, France
