A Dynamic Equilibrium Model of Inflation and Unemployment
1986 (English)Report (Other academic)
A stochastic general equilibrium model is constructed which is capable of examining the covariance properties between inflation and unemployment, both conditioned and unconditioned upon the state of exogenous real and monetary factors. Indivisibilities introduced into agents' labor choice decisions produce unemployment in equilibrium. It is shown that indigenous forces in a competitive economy can result in the traditional negative relationship between inflation and unemployment. The policymaker, while perhaps observing a begatively sloped Phillips curve, actually faces Friedman's positively sloped one.
Place, publisher, year, edition, pages
Stockholm: IIES , 1986. , 44 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 373
IdentifiersURN: urn:nbn:se:su:diva-41554OAI: oai:DiVA.org:su-41554DiVA: diva2:331164
Published in connection with a visit at the IIES.2010-07-212010-07-212010-07-21