Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33765
Authors: 
Lehmann, Etienne
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers 2194
Abstract: 
In this paper, I introduce money in the standard labor-matching model (Mortensen and Pissarides 1999, Pissarides 2000). A double coincidence problem makes Fiat Money necessary as a medium of exchange. In the long-run, a rise in the rate of money growth leads to higher inflation and higher unemployment, so the long-run Phillips curve is not vertical. The optimal monetary growth rate decreases with the workers' bargaining power, the level of unemployment benefits and the payroll tax rate.
Subjects: 
inflation
unemployment
search-matching
Friedman rule
JEL: 
E24
E52
J64
Document Type: 
Working Paper

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