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Content archived on 2024-06-10

Money, monopolistic competition, staggered wage setting and business cycle

Objective



My project follows the line of research centred on the synthesis between RBC models and traditional Keynesian analysis. I aim to construct a dynamically optimising macromodel with overlapping wage contracts a la Gray-Fischer-Taylor. Then the model will be expanded to focus on two other related topics: (i) macroeconomic policy; (ii) open economy. With respect to (i) the definition of an optimal monetary policy will introduce the dynamic inconsistency problem. With respect to (ii) Backus et al. (1993) suggested that the introduction of money, labour contracts and imperfect competition could resolve the discrepancies between existing open economy dynamic general equilibnum models and data.
As my M.Sc. dissertation suggests: staggering can explain persistent real effects of monetary policy; the macroeconomic equilibrium depends on the distribution of wealth and this implies a "hysteresis" effect of temporary monetary shocks; moreover the model can provide a natural rigorous "welfare" basis for the studying of the time inconsistency problem.

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Funding Scheme

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Coordinator

UNIVERSITY OF WARWICK
EU contribution
No data
Address
University of Warwick
CV4 7AL Coventry
United Kingdom

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Total cost

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Participants (1)

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