Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30747
Authors: 
Lechthaler, Wolfgang
Merkl, Christian
Snower, Dennis J.
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper 2935
Abstract: 
In this paper we propose a novel way to model the labor market in the context of a New-Keynesian general equilibrium model, incorporating labor market frictions in the form of hiring and firing costs. We show that such a model is able to replicate many important stylized facts of the business cycle. The reactions to monetary and real shocks become much more sluggish. Job creation and job destruction are negatively correlated. And the volatility of unemployment is much larger than in the standard search and matching model.
Subjects: 
monetary persistence
labor market
hiring and firing costs
JEL: 
A00
A10
A11
E24
E32
E52
J23
Document Type: 
Working Paper

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