%0 Report
        %A Lehmann, Etienne
        %T A Search Model of Unemployment and Inflation
        %D 2006
        %8 2006 Jul
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 2194
        %U https://www.iza.org/publications/dp2194
        %X In this paper, I introduce money in the standard labor-matching model (Mortensen and Pissarides 1999, Pissarides 2000). A double coincidence problem makes Fiat Money necessary as a medium of exchange. In the long-run, a rise in the rate of money growth leads to higher inflation and higher unemployment, so the long-run Phillips curve is not vertical. The optimal monetary growth rate decreases with the workers’ bargaining power, the level of unemployment benefits and the payroll tax rate.
        %K search-matching
%K unemployment
%K Friedman rule
%K inflation