Kansas City Fed paper on search frictions in monetary policy
Monetary policy can have an adverse effect on inflation in markets with labour market search-and-matching frictions, a Kansas City Federal Reserve paper, published on Thursday, says.
Takushi Kurozumi and Willem Van Zandweghe, the paper's authors, analyse the effects of labour market frictions on the Taylor principle by incorporating labour market search-and-matching frictions into models for interest rate policy. Kurozumi and Van Zandweghe note that in a sticky-price model with labour market
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