TY  - JOUR
AU  - Galí, Jordi
AU  - Smets, Frank
AU  - Wouters, Rafael
TI  - Unemployment in an Estimated New Keynesian Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17084
PY  - 2011
Y2  - May 2011
DO  - 10.3386/w17084
UR  - http://www.nber.org/papers/w17084
L1  - http://www.nber.org/papers/w17084.pdf
N1  - Author contact info:
Jordi Galí
Centre de Recerca en Economia Internacional (CREI)
Ramon Trias Fargas 25
08005 Barcelona
SPAIN
Tel: 011-34-93-5422754
Fax: 011-34-93-5421860
E-Mail: jgali@crei.cat

Frank Smets
Postfach 16 03 19
D-60311 Frankfurt
GERMANY
Europe
E-Mail: frank.smets@ecb.int

Rafael Wouters
National Bank of Belgium
B-1000 Brussels
BELGIUM
E-Mail: rafael.wouters@nbb.be
M1  - published as Jordi Galí, Frank Smets, Rafael Wouters. "Unemployment in an Estimated New Keynesian Model," in Daron Acemoglu and Michael Woodford, editors, "NBER Macroeconomics Annual 2011, Volume 26" University of Chicago Press (2012)

M3  - presented at "26th Annual Conference on Macroeconomics", April 8-9, 2011
AB  - We reformulate the Smets-Wouters (2007) framework by embedding the theory of unemployment proposed in Galí (2011a,b). We estimate the resulting model using postwar U.S. data, while treating the unemployment rate as an additional observable variable. Our approach overcomes the lack of identification of wage markup and labor supply shocks highlighted by Chari, Kehoe and McGrattan (2008) in their criticism of New Keynesian models, and allows us to estimate a "correct" measure of the output gap. In addition, the estimated model can be used to analyze the sources of unemployment fluctuations.
ER  -