Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34127
Authors: 
Bodart, Vincent
Pierrard, Olivier
Sneessens, Henri R.
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers 2521
Abstract: 
RBC models with search unemployment and wage renegotiation generate too much wage volatility and too stable unemployment rate. Shimer (2004) shows that it is possible to reproduce a volatility of unemployment similar to that observed in actual economies by imposing full real wage rigidity. We use a similar model but with Calvo wage contracts and we obtain a microfounded equation of real wage rigidities. The models with full wage flexibility or full wage rigidity are obtained as particular cases. We show that a contract length of about six quarters fits best the observed cyclical properties of wages and unemployment.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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