@TechReport{iza:izadps:dp4302,
            	author={Dufourt, Frédéric and Lloyd-Braga, Teresa and Modesto, Leonor},
            	title={Expected Inflation, Sunspots Equilibria and Persistent Unemployment Fluctuations},
            	year={2009},
	month={Jul},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={4302},
            	url={https://www.iza.org/index.php/publications/dp4302},
	abstract={We propose and estimate a model where unemployment fluctuations result from self-fulfilling changes in expected inflation (sunspot shocks) affecting nominal wage bargaining. Since the estimated parameters fall near the locus of Hopf bifurcations, country-specific expected inflation shocks can replicate the strong persistence and heterogeneity observed in European unemployment rates. They also generate positive comovements in macroeconomic variables and a large relative volatility of consumption. All these features, hardly accounted for by standard sunspot-driven models, are explained here by the fact that liquidity constrained workers, facing earnings uncertainty in the context of imperfect unemployment insurance, choose to consume their current income.},
	keywords={unemployment fluctuations;sunspots equilibria;expected inflation;wage bargaining},
            }