Riksbank: inefficient labour markets distort growth
A Riksbank paper published in September finds linkages between the labour wedge and the output gap which help explain growth inefficiencies in United States.
Luca Sala, Ulf Söderström and Antonella Trigari, the authors, use a standard quantitative business cycle model with nominal price and wage rigidities to estimate the output gap - the gap between the actual and efficient levels of output - and the labour wedge - the wedge between households' marginal rate of substitution and firms' marginal
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