Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/266167 
Year of Publication: 
2019
Citation: 
[Journal:] Macroeconomic Dynamics [ISSN:] 1469-8056 [Volume:] 23 [Issue:] 4 [Publisher:] Cambridge University Press [Place:] Cambridge [Year:] 2019 [Pages:] 1703-1719
Publisher: 
Cambridge University Press, Cambridge
Abstract: 
We analyze the implications of trend growth for optimal monetary policy in the presence of search and matching unemployment. We show that trend growth 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. Our analysis implies that lower trend growth reduces not only the level but also the optimal volatility of the nominal interest rate.
Subjects: 
trend growth
unemployment
optimal monetary policy
labor market frictions
policy trade-of
Published Version’s DOI: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article
Document Version: 
Manuscript Version (Preprint)






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