Working Paper

Staggered Wages, Sticky Prices, and Labor Market Dynamics in Matching Models

Authors

  • Janett Neugebauer
  • Dennis Wesselbaum
Publication Date

This paper investigates the role of staggered wages and sticky prices in explaining stylized

labor market facts. We build on a partial equilibrium search and matching model and expand

the model to a general equilibrium model with sticky prices and/or staggered wages. We show

that the core model creates too much volatility in response to a technology shock. The sticky

price model outperforms the staggered wage model in terms of matching volatilities, while the

combination of both rigidities matches the data reasonably well.

Info

JEL Classification
E24, E32, J64

Key Words

  • search and matching
  • Staggered Wages
  • sticky prices