Labor Market Imperfections , Real Wage Rigidities and Financial Shocks
نویسندگان
چکیده
By using the recent Gertler and Kiyotakis (2010) setup, this paper explores the interaction between real distortions stemming from the labor market institutions and nancial shocks. We nd that neither labor market imperfections nor scal institutions determining tax wedges have an impact on the volatility of the real economy induced by a nancial shock. By contrast, real wage rigidities matter as they amplify the nancial shock e¤ects. Thus, economies with larger imperfections will not systematically observe larger or smaller recessions, unless a causality between imperfections and real wage rigidities is introduced. Jel codes: E32, E44.
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