This paper builds a macroeconomic model of equilibrium unemployment in which firms persistently face difficulties in selling their production and this affects their decisions to create jobs. Due to search-frictins on the product market, equilibrium unemployment is a U-shaped function of the...

This paper aims at investigating relationships between inflation and macroeconomic fluctuations. The theoretical debate associated to this question is important: Whereas the Keynesian expect a countercyclical behavior of inflation, Real Business Cycles theorists, stressing on the supply side,...

Using quarterly data from 1970-1987 we estimate a simple econometric model in which inflation and the money supply are jointly determined and in which expectations of inflation are rational, or forward-looking. The model is estimated using the recently developed `cointegration' principle in...