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Job Turnover, Trend Growth, And The Long-Run Phillips Curve

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  • Snower, Dennis J.
  • Tesfaselassie, Mewael F.

Abstract

The paper reexamines the long-run Phillips curve in a New Keynesian model with job turnover and trend productivity growth. We show that an increase in money growth has substantial positive effects on steady state output, consumption, and employment in the presence of (i) observed job turnover rates and, if consumption smoothing is sufficiently strong, (ii) observed productive growth rates. Furthermore, we show that the optimal inflation rate is slightly under 2% for reasonable calibrations of job turnover and trend growth.

Suggested Citation

  • Snower, Dennis J. & Tesfaselassie, Mewael F., 2017. "Job Turnover, Trend Growth, And The Long-Run Phillips Curve," Macroeconomic Dynamics, Cambridge University Press, vol. 21(4), pages 835-861, June.
    • Handle: RePEc:cup:macdyn:v:21:y:2017:i:04:p:835-861_00
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    Cited by:

    1. Dennery, Charles, 2019. "Dampened expectations in the Phillips Curve: A note," Economics Letters, Elsevier, vol. 184(C).
    2. Leonardo Bianchi dos Santos & Ricardo Ramalhete Moreira, 2021. "Nominal Effects of Changes in Total Factor Productivity: Evidence for an Emerging Economy," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(12), pages 1-89, December.
    3. Mewael Tesfaelassie & Maik Wolters, 2018. "The Impact of Growth on Unemployment in a Low vs. High Inflation Environment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 28, pages 34-50, April.

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