Productivity Shock and Optimal Monetary Policy in a Unionized Labor Market. Forthcoming: The Manchester School

This paper presents a New Keynesian model characterized by labor indivisibilities, unemployment and a unionized labor market. The bargaining process between unions and firms introduces real wage rigidity and creates an endogenous trade-off between inflation and output stabilization. Under an optimal discretionary monetary policy a negative productivity shock requires an increase in the nominal interest rate. Moreover, an operational instrument rule will satisfy the Taylor principle, but will also require that the nominal interest rate does not necessarily respond one to one to an increase in the efficient rate of interest. The model calibration studies the response of the unionzed economy to productivity shocks under different monetary policy rules. Download Inf

Photoexcitation in two-dimensional topological insulators: Generating and controlling electron wavepackets in Quantum Spin Hall systems

One of the most fascinating challenges in Physics is the realization of an electron-based counterpart of quantum optics, which requires the capability to generate and control single electron wave packets. The edge states of quantum spin Hall (QSH) systems, i.e. two-dimensional (2D) topological insulators realized in HgTe/CdTe and InAs/GaSb quantum wells, may turn the tide in the field, as they do not require the magnetic field that limits the implementations based on quantum Hall effect. Here we show that an electric pulse, localized in space and/or time and applied at a QSH edge, can photoexcite electron wavepackets by intra-branch electrical transitions, without invoking the bulk states or the Zeeman coupling. Such wavepackets are spin-polarised and propagate in opposite directions, with a density profile that is independent of the initial equilibrium temperature and that does not exhibit dispersion, as a result of the linearity of the spectrum and of the chiral anomaly characterising massless Dirac electrons. We also investigate the photoexcited energy distribution and show how, under appropriate circumstances, minimal excitations (Levitons) are generated. Furthermore, we show that the presence of a Rashba spin-orbit coupling can be exploited to tailor the shape of photoexcited wavepackets. Possible experimental realizations are also discussed.Comment: 17 pages, 3 Figure

We analyze, in this paper, a DSGE New Keynesian model with indi- visible labor where firms may belong to two different final goods producing sectors one where wages and employment are determined in competitive labor markets and the orther where wages and employment are the result of a contractual process between unions and firms. Bargaining between firms and monopoly unions implies real wage rigidity in the model and, in turn, an endogenous trade-off between output stabilization and infla- tion stabilization. We show that the negative effect of a productivity shock on inflation and the positive effect of a cost-push shock is crucially determined by the proportion of firms that belong to the competitive sec- tor. The larger is this number, the smaller are these effects. We derive a welfare based objective function as a second order Taylor approxima- tion of the expected utility of the economy's representative agent and we analyze optimal monetary policy. We show that the larger is the num- ber of firms that belong to the competitive sector, the smaller should be the response of the nominal interest rate to exogenous productivity and cost-push shocks. If we consider, however, an instrument rule where the interest rate must react to inflationary expectations, the rule is not af- fected by the structure of the labor market. The results of the model are consistent with a well known empirical regularity in macroeconomics, i.e. that employment volatility is larger than real wage volatility.

monetary policy

Productivity shocks and optimal monetary policy in a unionized labor market economy

In this paper we analyze a general equilibrium dynamic stochastic New Keynesian model characterized by labor indivisibilities, unemployment and a unionized labor market. The presence of monopoly unions introduces real wage rigidities in the model. We show that as in Blanchard Galì (2005) the so called "divine coincidence" does not hold and a trade-off between inflation stabilization and the output stabilization arises. In particular, a productivity shock has a negative effect on inflation, while a reservation-wage shock has an effect of the same size but with the opposite sign. We derive a welfare-based objective function for the Central Bank as a second order Taylor approximation of the expected utility of the economy's representative household, and we analyze optimal monetary policy under discretion and under commitment. Under discretion a negative productivity shock and a positive exogenous wage shock will require an increase in the nominal interest rate. An operational instrument rule, in this case, will satisfy the Taylor principle, but will also require that the nominal interest rate does not necessarily respond one to one to an increase in the efficient rate of interest. The model is calibrated under different monetary policy rules and under the optimal rule. We show that the correlation between productivity shocks and employment is strongly influenced by the monetary policy regime. The results of the model are consistent with a well known empirical regularity in macroeconomics, i.e. that employment volatility is relatively larger than real wage volatility.

Monetary Policy and Automatic Stabilizers: the Role of Progressive Taxation

We study the effects of progressive labor income taxation in an otherwise standard NK model. We show that progressive taxation (i) introduces a trade-off between output and inflation stabilization and affects the slope of the Phillips Curve; (ii) acts as automatic stabilizer changing the responses of the economy to technology shocks and demand shocks (iii) alters the prescription for the optimal discretionary interest rate rule. We also show that the welfare gains from commitment decrease as labor income taxes become more progressive. Quantitatively, the model is able to reproduce the observed negative correlation between the volatility of output, hours and in?ation and the degree of progressivity of labor income taxation.

Optimal monetary policy in economies with dual labor markets

We analyze, in this paper, a DSGE New Keynesian model with indivisible labor where firms may belong to two different final goods producing sectors: one where wages and employment are determined in competitive labor markets and the other where wages and employment are the result of a contractual process between unions and …rms. Bargaining between firms and monopoly unions implies real wage rigidity in the model and, in turn, an endogenous trade-o¤ between output stabilization and inflation stabilization. We show that the negative effect of a productivity shock on inflation and the positive effect of a cost-push shock is crucially determined by the proportion of firms that belong to the competitive sector. The larger is this number, the smaller are these effects. We derive a welfare based objective function as a second order Taylor approximation of the expected utility of the economy’s representative agent and we analyze optimal monetary policy. We show that the larger is the number of firms that belong to the competitive sector, the smaller should be the response of the nominal interest rate to exogenous productivity and cost-push shocks. If we consider, however, an instrument rule where the interest rate must react to inflationary expectations, the rule is not affected by the structure of the labor market. The results of the model are consistent with a well known empirical regularity in macroeconomics, i.e. that employment volatility is larger than real wage volatility.

Productivity shocks and Optimal Monetary Policy in a Unionized Labor Market Economy

In this paper we analyze a general equilibrium dynamic stochastic New Keynesian model characterized by labor indivisibilities, unemployment and a unionized labor market. The presence of monopoly unions introduces real wage rigidities in the model. We show that as in Blanchard Galì (2005) the so called "divine coincidence" does not hold and a trade-off between inflation stabilization and the output stabilization arises. In particular, a productivity shock has a negative effect on inflation, while a reservation-wage shock has an effect of the same size but with the opposite sign. We derive a welfare-based objective function for the Central Bank as a second order Taylor approximation of the expected utility of the economy's representative household, and we analyze optimal monetary policy under discretion and under commitment. Under discretion a negative productivity shock and a positive exogenous wage shock will require an increase in the nominal interest rate. An operational instrument rule, in this case, will satisfy the Taylor principle, but will also require that the nominal interest rate does not necessarily respond one to one to an increase in the interest rate that supports the efficient equilibrium. The results of the model are consistent with a well known empirical regularity in macroeconomics, i.e. that employment volatility is relatively larger than real wage volatility.Optimal Monetary Policy, Monopolist Union, Labor Indivisibility

Dispersionless propagation of electron wavepackets in single-walled carbon nanotubes

We investigate the propagation of electron wavepackets in single-walled carbon nanotubes via a Lindblad-based density-matrix approach that enables us to account for both dissipation and decoherence effects induced by various phonon modes. We show that, while in semiconducting nanotubes the wavepacket experiences the typical dispersion of conventional materials, in metallic nanotubes its shape remains essentially unaltered, even in the presence of the electron-phonon coupling, up to micron distances at room temperature.Comment: 4 pages, 2 figures, accepted by Appl. Phys. Let

Wigner-function formalism applied to semiconductor quantum devices: Need for nonlocal scattering models

In designing and optimizing new-generation nanomaterials and related quantum devices, dissipation versus decoherence phenomena are often accounted for via local scattering models, such as relaxation-time and Boltzmann-like schemes. Here we show that the use of such local scattering approaches within the Wigner-function formalism may lead to unphysical results, namely anomalous suppression of intersubband relaxation, incorrect thermalization dynamics, and violation of probability-density positivity. Furthermore, we propose a quantum-mechanical generalization of relaxation-time and Boltzmann-like models, resulting in nonlocal scattering superoperators that enable one to overcome such limitations.Comment: 12 pages, 7 figure