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'Inflation and Unemployment in the long run'.

Event details of MInt seminar: Guido Menzio (University of Pennsylvania)
Date 11 September 2009
Time 16:00 -17:30
Location Gijsbert van Tienhovengebouw

Inflation and Unemployment in the long run

joint with Aleksander Berentsen & Randy Wright

Abstract: We study the long-run relation between money, measured by in.ation or interest rates, and unemployment. We .rst document in the data a positive relation between these variables at low frequencies. We then develop a framework where unemployment and money are both modeled using microfoundations based on search and bargaining theory, providing a unified theory for analyzing labor and goods markets. The calibrated model shows that money can account for a sizable fraction of trends in unemployment. We argue it matters, qualitatively and quantitatively, whether one uses monetary theory based on search and bargaining, or an alternative ad hoc specification.

Gijsbert van Tienhovengebouw

Roetersstraat 31
1018 WB Amsterdam