Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/4035 
Year of Publication: 
2007
Series/Report no.: 
Working Paper No. 604
Publisher: 
Queen Mary University of London, Department of Economics, London
Abstract: 
This paper analyses the relation between US inflation and unemployment from the perspective of "frictional growth," a phenomenon arising from the interplay between growth and frictions. In particular, we examine the interaction between money growth (on the one hand) and various real and nominal frictions (on the other). In this context we show that monetary policy has not only persistent, but permanent real effects, giving rise to a long-run inflation-unemployment tradeoff. We evaluate this tradeoff empirically and assess the impact of productivity, money growth, budget deficit, and trade deficit on the US unemployment and inflation trajectories during the nineties.
Subjects: 
Inflation dynamics
Unemployment dynamics
Phillips curve
Roaring nineties
JEL: 
E51
E31
E24
E62
Document Type: 
Working Paper

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