Christoffel, Kai; Kuester, Keith; Linzert, Tobias - European Central Bank - 2009
In this paper, we explore the role of labor markets for monetary policy in the euro area in a New Keynesian model in … labor market would alter the business cycle behaviour and the transmission of monetary policy. We find that while a lower … degree of wage rigidity makes monetary policy more effective, i.e. a monetary policy shock transmits faster onto inflation …