TY  - RPRT
        AU  - Bodart, Vincent
AU  - Pierrard, Olivier
AU  - Sneessens, Henri R.
        TI  - Calvo Wages in a Search Unemployment Model
        PY  - 2006/Dec/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 2521
        UR  - https://www.iza.org/publications/dp2521
        AB  - 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.
        KW  - search unemployment
KW  - Calvo wage
KW  - cyclical properties
        ER  -