Inflation and Unemployment in the Long Run

American Economic Review - Tập 101 Số 1 - Trang 371-398 - 2011
Aleksander Berentsen1, Guido Menzio2, Randall Wright3
1Faculty of Business and Economics, University of Basel, Peter-Merian-Weg 6, Postfach, CH-4002 Basel, Switzerland.
2Department of Economics, University of Pennsylvania, 3718 Locust Walk, Philadelphia, PA 19104.
3Department of Finance and Department of Economics, University of Wisconsin–Madison, 975 University Ave., Madison, WI 53706, and Federal Reserve Bank of Minneapolis, 90 Hennepin Ave., Minneapolis, MN 55401.

Tóm tắt

We study the long-run relation between money (inflation or interest rates) and unemployment. We document positive relationships between these variables at low frequencies. We develop a framework where money and unemployment are modeled using explicit microfoundations, providing a unified theory to analyze labor and goods markets. We calibrate the model and ask how monetary factors account for labor market behavior. We can account for a sizable fraction of the increase in unemployment rates during the 1970s. We show how it matters whether one uses monetary theory based on the search-and-bargaining approach or on an ad hoc cash-in-advance constraint. (JEL E24, E31, E41, E43, E52)

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Thông tin
Thông tin xuất bản

American Economic Review

Tập 101 Số 1

371-398

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