Unemployment in an Estimated New Keynesian Model
By Jordi Galí, Frank Smets, Raf Wouters. NBER macroeconomics annual, 2012
416 citations recorded by the source corpus.
We reformulate the Smets-Wouters (2007) framework by embedding the theory of unemployment proposed in Gali (2011a,b). We estimate the resulting model using postwar U.S. data, while treating the unemployment rate as an additional observable variable. Our approach overcomes the lack of identification of wage markup and labor supply shocks highlighted by Chari, Kehoe and McGrattan (2008) in their criticism of New Keynesian models, and allows us to estimate a "correct" measure of the output gap. In addition, the estimated model can be used to analyze the sources of unemployment fluctuations.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/c349e79b56ea5a43d88a6a02a069517008aae21d
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- Christiane Baumeister
- Lutz Kilian
- Benjamin Moll
- Alejandro Justiniano
- Andrea Tambalotti
- James D. Hamilton
- Francisco J. Buera
- V. Ramey
Citations in the corpus
- Aggregate Implications of a Credit Crunch: The Importance of Heterogeneity (2015, result): “…agent framework and aggregate data alone, for example most of the “New Keynesian” literature as exemplified by Smets and Wouters (2007) and Galí, Smets, and Wouters (2012).13 In raising these concerns, our paper has much in common with the work by Chang and Kim (2007) and Chang, Kim,…”
- Monetary and Macroprudential Policies in an Estimated Model with Financial Intermediation (2014, background): “Di¤erently from Gertler and Karadi (2011), who treat t as a constant, we follow Dedola et al.”
- How Useful Are Estimated DSGE Model Forecasts for Central Bankers? (2010, neutral): “[12] Gali, J.”
- Sign Restrictions, Structural Vector Autoregressions, and Useful Prior Information ∗ (2015, background): “On the other hand, theoretical macro models can imply a value of 2.5 or higher (Akerlof and Dickens, 2007; Galí, Smets, and Wouters, 2012).”
- Is there a trade-off between inflation and output stabilization? (2013, methodology): “…interested in characterizing the equilibrium implications of optimal policy do not need to take a strong stance on the ultimate sources of labor supply shocks, an issue that remains unsettled in the literature (e.g. Gali, Smets, and Wouters (2011) and Christiano, Trabandt, and Walentin (2010)).”