Sectoral Labor Mobility and Optimal Monetary Policy [electronic resource] / Alessandro Cantelmo.
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TextSeries: IMF Working PapersPublication details: Washington, D.C. : International Monetary Fund, 2017Description: 1 online resource (33 p.)ISBN: 1475584784 :ISSN: 1018-5941Subject(s): Central Banks And Their Policies | DSGE | Durable Goods | Labor Mobility | Optimal Monetary Policy | All CountriesAdditional physical formats: Print Version:: Sectoral Labor Mobility and Optimal Monetary PolicyOnline resources: IMF e-Library | IMF Book Store Abstract: In an estimated two-sector New-Keynesian model with durable and nondurable goods, an inverse relationship between sectoral labor mobility and the optimal weight the central bank should attach to durables inflation arises. The combination of nominal wage stickiness and limited labor mobility leads to a nonzero optimal weight for durables inflation even if durables prices were fully flexible. These results survive alternative calibrations and interestrate rules and point toward a non-negligible role of sectoral labor mobility for the conduct of monetary policy.
In an estimated two-sector New-Keynesian model with durable and nondurable goods, an inverse relationship between sectoral labor mobility and the optimal weight the central bank should attach to durables inflation arises. The combination of nominal wage stickiness and limited labor mobility leads to a nonzero optimal weight for durables inflation even if durables prices were fully flexible. These results survive alternative calibrations and interestrate rules and point toward a non-negligible role of sectoral labor mobility for the conduct of monetary policy.
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