Series: IMF Working Papers
Author(s): Paolo Surico , Luca Ricci , and Pierpaolo Benigno
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 November 2010
Keywords: macroeconomic volatility, downward wage rigidities, unemployment rate, employment, unemployment rates, rate of unemployment, Macroeconomics and Monetary Economics: General, Macroeconomics: Consumption, Saving, Production
We propose a theory of low-frequency movements in unemployment based on asymmetric real wage rigidities. The theory generates two main predictions: long-run unemployment increases with (i) a fall in long-run produc...