%0 Report
        %A Bodart, Vincent
%A Pierrard, Olivier
%A Sneessens, Henri R.
        %T Calvo Wages in a Search Unemployment Model
        %D 2006
        %8 2006 Dec
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 2521
        %U https://www.iza.org/publications/dp2521
        %X RBC models with search unemployment and wage renegotiation generate too much wage volatility and too stable unemployment rate. Shimer (2004) shows that it is possible to reproduce a volatility of unemployment similar to that observed in actual economies by imposing full real wage rigidity. We use a similar model but with Calvo wage contracts and we obtain a microfounded equation of real wage rigidities. The models with full wage flexibility or full wage rigidity are obtained as particular cases. We show that a contract length of about six quarters fits best the observed cyclical properties of wages and unemployment.
        %K search unemployment
%K Calvo wage
%K cyclical properties