Christian Merkl

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his paper examines the implications of employment subsidies for employment, welfare, and inequality. In particular, it investigates how these effects depend which groups these subsidies are targeted at. Our analysis focuses on policies that are "approximately welfare efficient" (AWE), i.e. policies that that (a) improve employment and welfare, (b) do not(More)
It is common knowledge that the standard New Keynesian model is not able to generate a persistent response in output to temporary monetary shocks. We show that this shortcoming can be remedied in a simple and intuitively appealing way through the introduction of labor turnover costs (such as hiring and firing costs). Assuming that it is costly to hire and(More)
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The responsibility for the contents of the working papers rests with the authors, not the Institute. Since working papers are of a preliminary nature, it may be useful to contact the authors of a particular working paper about results or caveats before referring to, or quoting, a paper. Any comments on working papers should be sent directly to the authors.(More)
This paper presents a theory of the labor market matching process in terms of incentive-based, two-sided search among heterogeneous agents. The matching process is decomposed into its two component stages: the contact stage, in which job searchers make contact with employers and the selection stage, in which they decide whether to match. We construct a(More)
Discussion Papers represent the authors' personal opinions and do not necessarily reflect the views of the Deutsche Bundesbank or its staff. Abstract Based on a quarterly regulatory dataset for German banks from 1999 to 2004, this paper analyzes the effects of banks' regulatory capital on the transmission of monetary policy in a system of liquidity(More)
Several contributions have recently assessed the size of …scal multipliers both in RBC models and New Keynesian models. None of the studies considers a model with frictional labour markets which is a crucial element, particularly at times in which much of the …scal stimulus has been directed toward labour market measures. We use an open economy model (more(More)
We study the design of optimal monetary policy in a New Keynesian model with labor turnover costs in which wages are set according to a right to manage bargaining where the …rms'counterpart is given by currently employed workers. Our model captures well the salient features of European labor market, as it leads to sclerotic dynamics of job ‡ows. The(More)
Why do more educated workers experience lower unemployment rates and lower employment volatility? A closer look at the data reveals that these workers have similar job finding rates, but much lower and less volatile separation rates than their less educated colleagues. We argue that on-the-job training, being complementary to formal education, is the reason(More)