Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/112796
Authors: 
Lechthaler, Wolfgang
Tesfaselassie, Mewael
Year of Publication: 
2015
Series/Report no.: 
Kiel Working Paper 2003
Abstract: 
We analyze the implications of changes in the trend growth rate for optimal monetary policy in the presence of search and matching unemployment. We show that trend growth in itself does not generate a trade-off for the monetary authority, but that it interacts importantly with the inefficiencies stemming from the labor market. Higher trend growth exacerbates the inefficiencies of the labor market and therefore calls for larger deviations from price stability.
Subjects: 
trend growth
trend inflation
unemployment
JEL: 
E12
E24
E52
Document Type: 
Working Paper

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