Trend growth, unemployment and optimal monetary policy

We analyze the implications of changes in the trend growth rate for optimal monetary policy in the presence of search and matching unemployment. We show that trend growth in itself does not generate a trade-off for the monetary authority, but that it interacts importantly with the inefficiencies stemming from the labor market. Higher trend growth exacerbates the inefficiencies of the labor market and therefore calls for larger deviations from price stability.

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Year of publication:	2015
Authors:	Lechthaler, Wolfgang ; Tesfaselassie, Mewael
Publisher:	Kiel : Kiel Institute for the World Economy (IfW)
Subject:	trend growth \| trend inflation \| unemployment

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Series:	Kiel Working Paper ; 2003
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	832563668 [GVK] hdl:10419/112796 [Handle] RePEc:zbw:ifwkwp:2003 [RePEc]
Classification:	E12 - Keynes; Keynesian; Post-Keynesian ; E24 - Employment; Unemployment; Wages ; E52 - Monetary Policy (Targets, Instruments, and Effects)
Source:	EconStor

Persistent link: https://www.econbiz.de/10011301390