Labor Selection, Turnover Costs, and Optimal Monetary Policy

We study optimal monetary policy and welfare properties of a dynamic stochastic general equilibrium (DSGE) model with a labor selection process, labor turnover costs, and Nash bargained wages. We show that our model implies inefficiencies that cannot be offset in a standard wage bargaining regime. W...

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Bibliographic details
Volume:	46
Main Author:	ESTER FAIA WOLFGANG LECHTHALER CHRISTIAN MERKL
Format:	Journal Article
Language:	English
Zielgruppe:	Academic
Place of publication:	HOBOKEN Wiley Subscription Services 01.02.2014 WILEY-BLACKWELL Wiley Subscription Services, Inc
published in:	Journal of money, credit and banking Vol. 46; no. 1; pp. 115 - 144
Data of publication:	20140201
ISSN:	0022-2879 1538-4616
EISSN:	1538-4616
Discipline:	Economics Business
Bibliography:	A previous draft of this paper has been circulated as “Labor Turnover Costs, Workers' Heterogeneity and Optimal Monetary Policy.” We thank seminar participants at Goethe University Frankfurt, the universities of Bayreuth, Dortmund, and Würzburg, GREQAM, Kiel IfW, University of Rome II, and conference participants at the ECB Wage Dynamics Network, Konstanz seminars in Monetary Theory and Policy, the EES workshop “The Labor Market and the Business Cycle,” the Spring Meeting of Young Economists, the Society for Economic Dynamics, the North American Summer Meeting of the Econometric Society, the ZEW conference on “Recent Developments in Macroeconomics.” We thank Christian Bayer and Felix Hammermann for discussing the paper. We gratefully acknowledge financial support from the Leibniz grant. Christian Merkl thanks the Fritz Thyssen foundation for support during his visit at the NBER. We thank Nina Biljanovska and Tom Schmitz for excellent research assistance.
Subjects:	Productivity Economic fluctuations Employment Operating costs Employment termination Hiring Monetary policy Labor markets Employee turnover Unemployment optimal monetary policy E52 labor selection policy trade‐off E24 hiring and ring costs Economics Business & Economics Social Sciences Business, Finance Employers Analysis Compensation and benefits Models Wages Negotiation, mediation and arbitration RATIONAL-EXPECTATIONS WAGE CYCLICAL BEHAVIOR E52 FIRING COSTS SEARCH E24 KEYNESIAN MODEL FRICTIONS optimal monetary policy DEMAND policy trade-off labor selection STICKY PRICES UNEMPLOYMENT hiring and ring costs
Online Access:	Fulltext
Database:	Social Sciences Citation Index Web of Science - Social Sciences Citation Index - 2014 Web of Knowledge Web of Science CrossRef Gale General OneFile (A&I only) Academic OneFile (A&I only) Database information Databases - DBIS