Optimal Monetary Policy with Government-Provided Unemployment Benefits

IF 0.5 4区 经济学 Q4 ECONOMICS B E Journal of Macroeconomics Pub Date : 2023-11-01 DOI:10.1515/bejm-2022-0114
Mehrab Kiarsi
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Abstract

Abstract This paper considers a standard New Keynesian model with matching frictions and explores the impact of modeling the opportunity cost of employment as government unemployment transfers. The findings reveal that under such circumstances, maintaining full price stability at all times ceases to be optimal. This outcome persists even when production subsidies are introduced to address inefficiencies caused by imperfect competition in product and factor markets, and when wages are fully flexible and the Hosios condition holds. For a realistic calibration of the opportunity cost, the Ramsey-optimal policy necessitates a positive inflation rate with high volatility. The degree of inflation volatility required increases with the magnitude of unemployment transfers. Consequently, committing to an inflation targeting regime proves to be highly costly in this context. Additionally, the study demonstrates that the optimal inflation variability decreases with workers’ bargaining power. This is because higher workers’ bargaining power leads to reduced labor market fluctuations, thereby lowering the need for large inflation adjustments.
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政府提供失业救济的最优货币政策
摘要本文考虑了一个具有匹配摩擦的标准新凯恩斯模型,并探讨了政府失业转移时就业机会成本建模的影响。研究结果表明,在这种情况下,始终保持价格完全稳定不再是最佳选择。即使在引入生产补贴以解决产品和要素市场不完全竞争造成的低效率问题时,当工资完全灵活且Hosios条件成立时,这种结果仍然存在。为了对机会成本进行现实的校准,拉姆齐最优政策需要高波动性的正通货膨胀率。所需的通货膨胀波动程度随着失业转移的规模而增加。因此,在这种情况下,实行通胀目标制被证明代价高昂。此外,研究还表明,最优通胀变异性随着工人议价能力的提高而降低。这是因为较高的工人议价能力导致劳动力市场波动减少,从而降低了大幅调整通胀的必要性。
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来源期刊
CiteScore
0.80
自引率
0.00%
发文量
20
期刊介绍: The B.E. Journal of Macroeconomics publishes significant research and scholarship in both theoretical and applied macroeconomics. The journal\"s mandate is to assemble papers from the broad research spectrum covered by modern macroeconomics. The range of topics includes business cycle research, economic growth, and monetary economics, as well as topics drawn from the substantial areas of overlap between macroeconomics and international economics, labor economics, finance, development economics, political economy, public economics, and econometric theory.
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