Title of article :
Optimalfiscalandmonetarypolicywithcostlywagebargaining
Author/Authors :
DavidM.Arseneau، نويسنده ,
Issue Information :
روزنامه با شماره پیاپی سال 2008
Abstract :
Costlynominalwageadjustmenthasreceivedrenewedattentioninthedesignof
optimal policy.Inthispaper,weembedcostlynominalwageadjustmentintothe
moderntheoryoffrictionallabormarketstostudyoptimalfiscalandmonetarypolicy.
The mainresultisthattheoptimalrateofpriceinflationisquitevolatiledespitethe
presence ofnominalwagerigidities.Thisfindingcontrastswithresultsobtainedin
standardsticky-wagemodels,whichemployneoclassicallabormarketsattheircore.In
addition,thetax-smoothingresultthatliesattheheartofoptimalpolicyprescriptions
in standardRamseymodelsdoesnotcarryovertoasearchandbargainingenvironment.
Both resultsstemfromacommonsourceinourmodel.Sharedrentsassociatedwiththe
formationoflong-termemploymentrelationshipsimplythattheoptimalpolicyentails
fluctuationsinafter-taxrealwagesmuchlargerthaninmodelswithneoclassicallabor
markets, inwhichnosuchrent-sharingmarginexists.Theresultsdemonstratethatthe
level atwhichnominalwagerigidityismodeled—whethersimplylayeredontopofa
neoclassicalmarketorarticulatedinthecontextofanexplicitrelationshipbetween
workersandfirms—can matteragreatdealforpolicyrecommendations
Keywords :
Inflation stabilityRealwagedynamicsRamsey modelFriedmanRuleLabor search
Journal title :
Journal of Monetary Economics
Journal title :
Journal of Monetary Economics
