Resumen
We analyze the effects of informal labor markets on the dynamics of inflation and on the transmission of aggregate demand and supply shocks. In doing so, we incorporate the informal sector in a modified New Keynesian model with labor market frictions as in the Diamond-Mortensen-Pissarides model. Our main results show that the informal economy generates a "buffer" effect that diminishes the pressure of demand shocks on inflation. Finding that is consistent with the empirical literature on the effects of informal labor markets in business cycle fluctuations. This result implies that in economies with large informal labor markets the interest rate channel of monetary policy is relatively weaker. Furthermore, the model produces cyclical flows from informal to formal employment consistent with the data.
Título traducido de la contribución | Dinámica inflacionaria en presencia de informalidad en mercados laborales |
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Idioma original | Inglés |
Páginas (desde-hasta) | 4-31 |
Número de páginas | 28 |
Publicación | Economia Chilena |
Volumen | 15 |
N.º | 1 |
Estado | Publicada - abr. 2012 |
Publicado de forma externa | Sí |