Autori
Tancioni, Massimiliano
Riggi, Marianna

Titolo
Nominal v. Real Wage Rigidities in New Keynesian Models with Hiring Costs: a Bayesian Evaluation
Periodico
Università degli Studi di Roma "La Sapienza" - Dipartimento di Economia Pubblica. Working Paper
Anno: 2008 - Volume: 1 - Fascicolo: 107 - Pagina iniziale: 1 - Pagina finale: 42

The introduction of labor market frictions into the New Keynesian DSGE model solves some of the main drawbacks of the baseline framework. In this paper we show that this extended model, by assuming real wage rigidities, fails to replicate the correct wage dynamics and the observed negative conditional correlation between supply shocks and employment, known as “productivityemployment puzzle”. We then show that these empirical limitations can be overcome by a model incorporating nominal wage rigidities in addition to price rigidities and hiring costs. Adopting a Bayesian perspective, we estimate the dynamic properties of the model with real wage rigidities and confront them with those of the model with nominal wage rigidities, concluding that there is decisive evidence in favor of the latter.



SICI: 1974-2940(2008)1:107<1:NVRWRI>2.0.ZU;2-N
Testo completo: http://dep.eco.uniroma1.it/docs/working_papers/Wp107.pdf

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