Kiel Working Papers, Kiel Institute for World Economics
No 1608:
Staggered Wages, Sticky Prices, and Labor Market Dynamics in Matching Models
Janett Neugebauer and Dennis Wesselbaum
Abstract: This paper investigates the role of staggered wages and
sticky prices in explaining stylized labor market facts. We build on a
partial equilibrium search and matching model and expand the model to a
general equilibrium model with sticky prices and/or staggered wages. We
show that the core model creates too much volatility in response to a
technology shock. The sticky price model outperforms the staggered wage
model in terms of matching volatilities, while the combination of both
rigidities matches the data reasonably well
Keywords: Search and Matching, Staggered Wages, Sticky Prices; (follow links to similar papers)
JEL-Codes: E24,; E32,; J64; (follow links to similar papers)
12 pages, March 2010
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