Replication data for: Welfare-Based Optimal Monetary Policy with Unemployment and Sticky Prices: A Linear-Quadratic Framework
Principal Investigator(s): View help for Principal Investigator(s) Federico Ravenna; Carl E. Walsh
Version: View help for Version V1
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AEJMacro_2009-0213_prgs_final | 10/12/2019 09:08:PM | ||
LICENSE.txt | text/plain | 14.6 KB | 10/12/2019 05:08:PM |
Project Citation:
Ravenna, Federico, and Walsh, Carl E. Replication data for: Welfare-Based Optimal Monetary Policy with Unemployment and Sticky Prices: A Linear-Quadratic Framework. Nashville, TN: American Economic Association [publisher], 2011. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114196V1
Project Description
Summary:
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We derive a linear-quadratic model that is consistent with sticky prices and search and matching frictions in the labor market. We show that the second-order approximation to the welfare of the representative agent depends on inflation and "gaps" that involve current and lagged unemployment. Our approximation makes explicit how welfare costs are generated by the presence of search frictions. These costs are distinct from the costs associated with relative price dispersion and fluctuations in consumption that appear in standard new
Keynesian models. We show the labor market structure has important implications for optimal monetary policy. (JEL E24, E31, E52)
Scope of Project
JEL Classification:
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E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E31 Price Level; Inflation; Deflation
E52 Monetary Policy
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E31 Price Level; Inflation; Deflation
E52 Monetary Policy
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