Sectoral labor adjustment and monetary policy in a small open economy
Publication in refereed journal


香港中文大学研究人员 ( 现职)


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Web of Sciencehttp://aims.cuhk.edu.hk/converis/portal/Publication/3WOS source URL
Scopushttp://aims.cuhk.edu.hk/converis/portal/Publication/3Scopus source URL

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摘要This paper studies the welfare implications of sectoral labor adjustment cost in a two-sector small open economy model with sticky prices. We find that, when the economy faces external shocks, if monetary policy can stabilize the real economy, then sectoral labor market adjustment cost will lead to welfare loss. However, if monetary policy such as fixed exchange rates cannot stabilize real variables, then some degree of labor market friction will improve welfare instead and the gain will be significant. As a result, the welfare gap between flexible exchange rates and fixed exchange rates decreases with sectoral labor market friction. This is because the friction can offset some of the nominal rigidity and become a substitute for monetary policy to stabilize the real economy. ? 2011 Elsevier Inc.

着者Shi K.
期刊名称JOURNAL OF MACROECONOMICS
出版年份2011
月份12
日期1
卷号http://aims.cuhk.edu.hk/converis/portal/Publication/3http://aims.cuhk.edu.hk/converis/portal/Publication/3
期次4
出版社Elsevier BV
出版地Netherlands
页次6http://aims.cuhk.edu.hk/converis/portal/Publication/34 - 64http://aims.cuhk.edu.hk/converis/portal/Publication/3
国际标準期刊号0164-0704
语言英式英语

关键词Exchange rate policy, Labor adjustment cost, Two-sector model, Welfare