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Inflation dynamics with labour market matching: assessing alternative specifications. NBB Working Papers. No. 164, May 19, 2009

Christoffel, Kai and Costain, James and Walque, Gregory de and Kuester, Keith and Linzert, Tobias and Millard, Stephen and Pierrard, Olivier. (2009) Inflation dynamics with labour market matching: assessing alternative specifications. NBB Working Papers. No. 164, May 19, 2009. [Working Paper]

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    Abstract

    This paper reviews recent approaches to modeling the labour market, and assesses their implications for inflation dynamics through both their effect on marginal cost and on price-setting behaviour. In a search and matching environment, we consider the following modeling setups: right-to-manage bargaining vs. efficient bargaining, wage stickiness in new and existing matches, interactions at the firm level between price and wage-setting, alternative forms of hiring frictions, search on-the-job and endogenous job separation. We find that most specifications imply too little real rigidity and, so, too volatile inflation. Models with wage stickiness and right-to-manage bargaining or with firm-specific labour emerge as the most promising candidates.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > employment/labour market > labour/labor
    EU policies and themes > Policies & related activities > economic and financial affairs > monetary policy
    EU policies and themes > Policies & related activities > employment/labour market > industrial/labour relations
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > National Bank of Belgium (Brussels) > Working Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 20 May 2009
    Page Range: p. 57
    Last Modified: 15 Feb 2011 18:11
    URI: http://aei.pitt.edu/id/eprint/10969

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