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Francesco Zanetti
''Labor Market Frictions into Staggered Wage Contracts''
( 2006, Vol. 5 No.13 )
This paper proposes a generalization of the Calvo wage-setting equation, which embeds labor market frictions in the form of a Nash wage bargain. Adding labor market frictions changes significantly the dynamics of the standard wage-setting equation, such that it may have non-trivial implications for the design of optimal monetary policy, and could improve the ability of a general equilibrium model to replicate important labor market stylized facts.
JEL: E3 - Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
J3 - Wages, Compensation, and Labor Costs: General
Manuscript Received : Oct 09 2006 Manuscript Accepted : Oct 09 2006

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