Labor Market Regimes and the Effects of Monetary Policy

  title={Labor Market Regimes and the Effects of Monetary Policy},
  author={Douglas A. Hibbs and N. Acocella and Giovanni Di Bartolomeo},
In this paper we use a standard multi-union, monopolistic competition model to evaluate analytically and numerically the effects of monetary policy on inflation and unemployment under different institutional arrangements in the labor market that are defined by the rigidity of nominal wages. We show that the effects of monetary policy on the real economy depend critically on the wage formation regime, and on the ways in which the restrictiveness of policy interacts with product price competition… CONTINUE READING
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