Inflation and unemployment in the long run
"We study the long-run relation between money, measured by inflation or interest rates, and unemployment. We first discuss data, documenting a strong positive relation between the variables at low frequencies. We then develop a framework where both money and unemployment are modeled using expli...
| Main Authors: | , , , |
|---|---|
| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Cambridge, MA
2008
NBER |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19189533124919077159-inflation-and-unemployment-in-.htm |
| _version_ | 1771659895237509120 |
|---|---|
| author | National Bureau of Economic Research, Cambridge Berentsen, Aleksander Menzio, Guido Wright, Randall G. |
| author_facet | National Bureau of Economic Research, Cambridge Berentsen, Aleksander Menzio, Guido Wright, Randall G. |
| collection | Library items |
| description | "We study the long-run relation between money, measured by inflation or interest rates, and unemployment. We first discuss data, documenting a strong positive relation between the variables at low frequencies. We then develop a framework where both money and unemployment are modeled using explicit microfoundations, integrating and extending recent work in macro and monetary economics, and providing a unified theory to analyze labor and goods markets. We calibrate the model, to ask how monetary factors account quantitatively for low-frequency labor market behavior. The answer depends on two key parameters: the elasticity of money demand, which translates monetary policy to real balances and profits; and the value of leisure, which affects the transmission from profits to entry and employment. For conservative parameterizations, money accounts for some but not that much of trend unemployment - by one measure, about 1/5 of the increase during the stagflation episode of the 70s can be explained by monetary policy alone. For less conservative but still reasonable parameters, money accounts for almost all low-frequency movement in unemployment over the last half century." |
| format | TEXT |
| id | 19189533124919077159_86a1007f9bd543499a54681ed1d45d79 |
| institution | ETUI-European Trade Union Institute |
| is_hierarchy_id | 19189533124919077159_86a1007f9bd543499a54681ed1d45d79 |
| is_hierarchy_title | Inflation and unemployment in the long run |
| language | English |
| physical | 45 p. Digital |
| publishDate | 2008 |
| publisher | Cambridge, MA NBER |
| spellingShingle | National Bureau of Economic Research, Cambridge Berentsen, Aleksander Menzio, Guido Wright, Randall G. economic model inflation long term unemployment Inflation and unemployment in the long run |
| title | Inflation and unemployment in the long run |
| topic | economic model inflation long term unemployment |
| url | https://www.labourline.org/KENTIKA-19189533124919077159-inflation-and-unemployment-in-.htm |