Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95268
Authors: 
Faia, Ester
Rossi, Lorenza
Year of Publication: 
2010
Series/Report no.: 
Quaderni di Dipartimento 126
Abstract: 
We study Ramsey policies and optimal monetary policy rules in a model with sticky prices and unionized labour markets. Collective wage bargaining and unions monopoly power dampen wage fluctuations and amplify employment fluctuations relatively to a DNK model. The optimal monetary policy must trade-off between stabilizing inflation and reducing inefficient unemployment fluctuations induced by unions' monopoly power. In this context the monetary authority uses inflation as a tax on unions' rents. The optimal monetary policy rule targets unemployment alongside inflation.
Document Type: 
Working Paper

Files in This Item:
File
Size
534.9 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.