Unemployment Fluctuations and Stabilization Policies A New Keynesian Perspective Jordi Gali The MIT Press Cambridge, Massachusetts London, England Contents Series Foreword ix Preface xi Introduction ...

I develop a version of the New Keynesian model with insider-outsider labor markets and hysteresis that can account for the high persistence of European unemployment. I study the implications of that environment for the design of monetary policy. The optimal policy calls for strong emphasis on...