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Title:Evaluating the search and matching model with sticky wages PDF Logo
Authors:Reicher, Christopher Phillip
Issue Date:2010
Series/Report no.:Kiel Working Papers 1674
Abstract:Several authors have proposed staggered wage bargaining as a way to introduce sticky wages into search and matching models while preserving individual rationality. I evaluate the quantitative implications of such an approach. I feed through a series of estimated shocks from US data into a search and matching model with sticky prices and wages. I compare the implications of how the sticky wages enter into the hiring decision, and there seems to be a tradeoff between generating business cycle volatility and matching the lack of a long-run relationship between vacancy creation and inflation. With regard to wages, the sticky wage model unconditionally does a better job at matching wages than the flexible wage model.
Subjects:Sticky wages
sticky prices
staggered Nash bargaining
inflation
new hires
search and matching
business cycles
JEL:E24
E25
E32
J23
J31
J63
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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