Nonlinear unemployment effects of the inflation tax
Long-run inflation has nonlinear and state-dependent effects on unemployment, output, and welfare. We show this using a standard monetary search model with two shocks – productivity and monetary – and frictions in both labor and goods markets. Inflation lowers the surplus from a worker–firm match, i...
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| مؤلفون آخرون: | , , |
| التنسيق: | article |
| منشور في: |
2022
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| الموضوعات: | |
| الوصول للمادة أونلاين: | http://dx.doi.org/10.1016/j.euroecorev.2022.104247 https://www.sciencedirect.com/science/article/pii/S0014292122001465 http://hdl.handle.net/10576/39958 |
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| _version_ | 1857415087493480448 |
|---|---|
| author | Mohammed, Ait Lahcen |
| author2 | Baughman, Garth Rabinovich, Stanislav van Buggenum, Hugo |
| author2_role | author author author |
| author_facet | Mohammed, Ait Lahcen Baughman, Garth Rabinovich, Stanislav van Buggenum, Hugo |
| author_role | author |
| dc.creator.none.fl_str_mv | Mohammed, Ait Lahcen Baughman, Garth Rabinovich, Stanislav van Buggenum, Hugo |
| dc.date.none.fl_str_mv | 2022-07-26 2023-02-12T06:39:59Z |
| dc.identifier.none.fl_str_mv | http://dx.doi.org/10.1016/j.euroecorev.2022.104247 Lahcen, M. A., Baughman, G., Rabinovich, S., & van Buggenum, H. (2022). Nonlinear unemployment effects of the inflation tax. European Economic Review, 148, 104247. 0014-2921 https://www.sciencedirect.com/science/article/pii/S0014292122001465 http://hdl.handle.net/10576/39958 148 1873-572X |
| dc.language.none.fl_str_mv | en |
| dc.publisher.none.fl_str_mv | Elsevier |
| dc.rights.none.fl_str_mv | http://creativecommons.org/licenses/by-nc-nd/4.0/ info:eu-repo/semantics/openAccess |
| dc.subject.none.fl_str_mv | Money Search Inflation Unemployment volatility Product–labor market interaction |
| dc.title.none.fl_str_mv | Nonlinear unemployment effects of the inflation tax |
| dc.type.none.fl_str_mv | Article info:eu-repo/semantics/publishedVersion info:eu-repo/semantics/article |
| description | Long-run inflation has nonlinear and state-dependent effects on unemployment, output, and welfare. We show this using a standard monetary search model with two shocks – productivity and monetary – and frictions in both labor and goods markets. Inflation lowers the surplus from a worker–firm match, in turn making it more sensitive to both productivity shocks and further increases in inflation. We calibrate the model to match key aspects of the US labor market and monetary data. The calibrated model is consistent with a number of empirical correlations, which we document using panel data from the OECD: (1) there is a positive long-run relationship between anticipated inflation and unemployment; (2) there is also a positive correlation between anticipated inflation and unemployment volatility; (3) the long-run inflation-unemployment relationship is stronger when unemployment is higher. The key mechanism through which the model generates these results is the negative effect of inflation on measured output per worker, which is likewise consistent with cross-country data. Finally, we show that the welfare cost of inflation is nonlinear in the level of inflation and is amplified by the presence of aggregate uncertainty. |
| eu_rights_str_mv | openAccess |
| format | article |
| id | qu_428c8ab49f24a9f947cd1eb198e258e7 |
| identifier_str_mv | Lahcen, M. A., Baughman, G., Rabinovich, S., & van Buggenum, H. (2022). Nonlinear unemployment effects of the inflation tax. European Economic Review, 148, 104247. 0014-2921 148 1873-572X |
| language_invalid_str_mv | en |
| network_acronym_str | qu |
| network_name_str | Qatar University repository |
| oai_identifier_str | oai:qspace.qu.edu.qa:10576/39958 |
| publishDate | 2022 |
| publisher.none.fl_str_mv | Elsevier |
| repository.mail.fl_str_mv | |
| repository.name.fl_str_mv | |
| repository_id_str | |
| rights_invalid_str_mv | http://creativecommons.org/licenses/by-nc-nd/4.0/ |
| spelling | Nonlinear unemployment effects of the inflation taxMohammed, Ait LahcenBaughman, GarthRabinovich, Stanislavvan Buggenum, HugoMoneySearchInflationUnemployment volatilityProduct–labor market interactionLong-run inflation has nonlinear and state-dependent effects on unemployment, output, and welfare. We show this using a standard monetary search model with two shocks – productivity and monetary – and frictions in both labor and goods markets. Inflation lowers the surplus from a worker–firm match, in turn making it more sensitive to both productivity shocks and further increases in inflation. We calibrate the model to match key aspects of the US labor market and monetary data. The calibrated model is consistent with a number of empirical correlations, which we document using panel data from the OECD: (1) there is a positive long-run relationship between anticipated inflation and unemployment; (2) there is also a positive correlation between anticipated inflation and unemployment volatility; (3) the long-run inflation-unemployment relationship is stronger when unemployment is higher. The key mechanism through which the model generates these results is the negative effect of inflation on measured output per worker, which is likewise consistent with cross-country data. Finally, we show that the welfare cost of inflation is nonlinear in the level of inflation and is amplified by the presence of aggregate uncertainty.Elsevier2023-02-12T06:39:59Z2022-07-26Articleinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articlehttp://dx.doi.org/10.1016/j.euroecorev.2022.104247Lahcen, M. A., Baughman, G., Rabinovich, S., & van Buggenum, H. (2022). Nonlinear unemployment effects of the inflation tax. European Economic Review, 148, 104247.0014-2921https://www.sciencedirect.com/science/article/pii/S0014292122001465http://hdl.handle.net/10576/399581481873-572Xenhttp://creativecommons.org/licenses/by-nc-nd/4.0/info:eu-repo/semantics/openAccessoai:qspace.qu.edu.qa:10576/399582024-07-23T10:00:36Z |
| spellingShingle | Nonlinear unemployment effects of the inflation tax Mohammed, Ait Lahcen Money Search Inflation Unemployment volatility Product–labor market interaction |
| status_str | publishedVersion |
| title | Nonlinear unemployment effects of the inflation tax |
| title_full | Nonlinear unemployment effects of the inflation tax |
| title_fullStr | Nonlinear unemployment effects of the inflation tax |
| title_full_unstemmed | Nonlinear unemployment effects of the inflation tax |
| title_short | Nonlinear unemployment effects of the inflation tax |
| title_sort | Nonlinear unemployment effects of the inflation tax |
| topic | Money Search Inflation Unemployment volatility Product–labor market interaction |
| url | http://dx.doi.org/10.1016/j.euroecorev.2022.104247 https://www.sciencedirect.com/science/article/pii/S0014292122001465 http://hdl.handle.net/10576/39958 |