Ramsey monetary policy with labor market frictions
Goethe University Frankfurt, Kiel IfW, CEPREMAP
New Keynesian model with Rotemberg price adjustment costs and Mortensen-Pissarides matching frictions in the labor market, featuring Nash wage bargaining, search externalities, and congestion externalities
monopolistic competition with Rotemberg quadratic price adjustment costs, constant returns to scale matching technology for hiring
Figure 3 p.579
Optimal Ramsey inflation volatility with bargaining power B=0.2 (below Hosios condition x=0.4)