Arbeitspapier
Trend Growth, Unemployment and Optimal Monetary Policy
Kieler Arbeitspapiere, 2003
Autoren
Erscheinungsdatum
JEL Classification
E12
E24
E52
Geldpolitik
Arbeitsmarkt
Wachstum
We analyze the implications of changes in the trend growth rate for optimal monetary policy in the presence of search and matching unemployment. We show that trend growth in itself does not generate a trade-off for the monetary authority, but that it interacts importantly with the inefficiencies stemming from the labor market. Higher trend growth exacerbates the inefficiencies of the labor market and therefore calls for larger deviations from price stability.
