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
Section 4 p.577
Long-run optimal Ramsey policy with sticky prices and matching frictions; zero average net inflation rate in steady state
Authors derive this as the main long-run optimal policy result in Section 4, equation (26)