Fluctuations, labour markets and financial shocks
نویسندگان
چکیده
An apparent puzzle from the recent nancial crisis is that economies with less competitive labor markets seem to have su¤ered less in terms of unemployment. The present paper investigates this puzzle by focusing on the interactions between nancial and labor market imperfections. In particular, we augment a simpli ed version of Gertler and Kiyotaki (2010) by introducing imperfect competition in the labor market. We nd that a higher labour wedge reduces real variables volatility in the presence of nancial frictions. By using simple simulations, we also broadly explore the impact of the main factors driving the labor wedge to provide an intuition on the e¤ects of di¤erent institutions. Jel codes: E32, E44.
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