Sequential bargaining in a new-Keynesian model with frictional unemployment and staggered wage negotiation
Raf Wouters,
Grégory de Walque,
Olivier Pierrard and
Henri Sneessens
No 1007, Working Paper Series from European Central Bank
Abstract:
We consider a model with frictional unemployment and staggered wage bargaining where hours worked are negotiated every period. The workers' bargaining power in the hours negotiation affects both unemployment volatility and inflation persistence. The closer to zero this parameter, (i) the more firms adjust on the intensive margin, reducing employment volatility, (ii) the lower the effective workers' bargaining power for wages and (iii) the more important the hourly wage in the marginal cost determination. This set-up produces realistic labour market statistics together with inflation persistence. Distinguishing the probability to bargain the wage of the existing and the new jobs, we show that the intensive margin helps reduce the new entrants wage rigidity required to match observed unemployment volatility. JEL Classification: E31, E32, E52, J64
Keywords: DSGE; monetary policy; nominal wage rigidity; search and matching (search for similar items in EconPapers)
Date: 2009-02
New Economics Papers: this item is included in nep-cba, nep-dge, nep-lab and nep-mac
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Citations: View citations in EconPapers (17)
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Working Paper: Sequential Bargaining in a New-Keynesian Model with Frictional Unemployment and Staggered Wage Negotiation (2009) 
Working Paper: Sequential bargaining in a New Keynesian model with frictional unemployment and staggered wage negotiation (2009) 
Working Paper: Sequential bargaining in a new-Keynesian model with frictional unemployment and staggered wage negotiation (2008) 
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20091007
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