Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153617
Authors: 
Abbritti, Mirko
Weber, Sebastian
Year of Publication: 
2010
Series/Report no.: 
ECB Working Paper No. 1183
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
This paper investigates the importance of labor market institutions for inflation and unemployment dynamics. Using the New Keynesian framework we argue that labor market institutions should be divided into those institutions that cause Unemployment Rigidities (UR) and those that cause Real Wage Rigidities (RWR). The two types of institutions have opposite effects and their interaction is crucial for the dynamics of inflation and unemployment. We estimate a panel VAR with deterministically varying coefficients and find that there is a profound difference in the responses of unemployment and inflation to shocks under different constellations of the labor market.
Subjects: 
business cycle
Labor Market Search
monetary policy
Real Wage Rigidity
Unemployment
JEL: 
E32
E24
E52
Document Type: 
Working Paper

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