Labor market participation, unemployment and monetary policy

• 成果类型: Article
• 署名作者: Campolmi, Alessia; Gnocchi, Stefano
• 署名单位: University of Verona; Bank of Canada
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2016.03.001
• 发表日期: 2016
• 页码: 17-29
• 关键词: Matching frictions; Endogenous participation; monetary policy

摘要

Models of unemployment and monetary policy usually assume constant participation. Incorporating a participation decision into a standard New Keynesian model with matching frictions, we show that market tightness becomes endogenously more volatile because both the opportunity cost of home production and the reservation wage vary with participation. The model can simultaneously explain the low volatility of participation, the high volatility of unemployment, and a procyclical workers' outside option of working. A policy of strict inflation targeting is close to optimal, and increasing the response of the interest rate to inflation does not have a large impact on the volatility of unemployment because of the endogenous response of participation. Crown Copyright (C) 2016 Published by Elsevier B.V. All rights reserved.