LABOR SEARCH MODELS: EFFICIENCY PROPERTIES NOVEMBER 13, 2008 LABOR-MATCHING EFFICIENCY. max ( Efficiency Considerations

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1 LABOR SEARCH MODELS: EFFICIENCY PROPERTIES NOVEMBER 3, 2008 LABOR-MATCHING EFFICIENCY Social Planning problem Social Planner also subject to matcing tecnology t ma ( t ct, vt, N β uc t= 0 c g γ v = z N ( N b Fi = t t t t t t t N = ( t ρ N t m( ut, vt And N = u November 3,

2 LABOR-MATCHING EFFICIENCY Social Planning problem Social Planner also subject to matcing tecnology t ma ( t ct, vt, N β uc t= 0 c g γ v = z N ( N b Fi = t t t t t t t N = ( ρ N m( N, v t t t t And N = u November 3, LABOR-MATCHING EFFICIENCY Social Planning problem Social Planner also subject to matcing tecnology t ma ( t ct, vt, N β uc t= 0 c g γ v = z N ( N b Fi = FOCs t t t t t t t N = ( t ρ N t m( Nt, vt u'( c λ = 0 t λ (, 0 tγ μtm2 Nt vt = And N = u { [ ]} { } μ t βet λt z t b βet μt ( ρ m ( Nt, vt = 0 t Eliminate multipliers Multipliers λ t μ t November 3,

3 LABOR-MATCHING EFFICIENCY Social Planning problem γ βu'( c γm( Nt, vt ( ρ γ = Et z b m2( Nt, vt u'( ct m2( Nt, vt m2( Nt, vt November 3, LABOR-MATCHING EFFICIENCY Social Planning problem γ βu'( c γm( Nt, vt ( ρ γ = Et z b m2( Nt, vt u'( ct m2( Nt, vt m2( Nt, vt Cobb-Douglas matcing muv (, = u v m( u, v = u v = θ m2( u, v = ( u v = θ November 3,

4 LABOR-MATCHING EFFICIENCY Social Planning problem γ βu'( c γm( Nt, vt ( ρ γ = Et z b m2( Nt, vt u'( ct m2( Nt, vt m2( Nt, vt m( u, v u v = = θ muv (, = = m(, θ = θ u m2( u, v ( u v muv (, = u v = = θ muv (, m( θ = =, = θ v Cobb-Douglas matcing November 3, LABOR-MATCHING EFFICIENCY Social Planning problem γ βu'( c γm( Nt, vt ( ρ γ = Et z b m2( Nt, vt u'( ct m2( Nt, vt m2( Nt, vt m( u, v u v = = θ muv (, = = m(, θ = θ u m2( u, v ( u v muv (, = u v = = θ muv (, m( θ = =, = θ v Cobb-Douglas matcing (, m ( u v = k θ (, ( m ( 2 u v = k θ November 3,

5 LABOR-MATCHING EFFICIENCY Social Planning problem γ βu'( c γm( Nt, vt ( ρ γ = Et z b m2( Nt, vt u'( ct m2( Nt, vt m2( Nt, vt m( u, v u v = = θ muv (, = = m(, θ = θ u m2( u, v ( u v muv (, = u v = = θ muv (, m( θ = =, = θ v Cobb-Douglas matcing Combine and rearrange (, m ( u v = k θ (, ( m ( 2 u v = k θ γ β u'( c ( ρ γ = Et t ( [ ] ( z z γθ b t u'( ct November 3, LABOR-MATCHING EFFICIENCY Social Planning problem γ βu'( c γm( Nt, vt ( ρ γ = Et z b m2( Nt, vt u'( ct m2( Nt, vt m2( Nt, vt m( u, v u v = = θ muv (, = = m(, θ = θ u m2( u, v ( u v muv (, = u v = = θ muv (, m( θ = =, = θ v Cobb-Douglas matcing Combine and rearrange (, m ( u v = k θ (, ( m ( 2 u v = k θ γ β u'( c ( ρ γ = Et t ( [ ] ( z z γθ b t u'( ct KEY IDEAS Taking te pricing kernel as given, te only unknown process ere is θ t! Eiciency in job-postings is governed by getting market tigtness rigt! November 3,

6 LABOR-MATCHING EFFICIENCY Socially-eicient vacancy posting described by γ β u'( c ( ρ γ = Et t ( [ ] ( z z γθ b t u'( ct November 3, 2008 LABOR-MATCHING EFFICIENCY Socially-eicient vacancy posting described by γ β u'( c ( ρ γ = Et t ( [ ] ( z z γθ b t u'( ct Recall decentralized vacancy posting described by γ βu'( c ( ρ γ = E t z w t u'( ct [ ] ( w = η z γθ η b t t t November 3,

7 LABOR-MATCHING EFFICIENCY Socially-eicient vacancy posting described by γ β u'( c ( ρ γ = Et t ( [ ] ( z z γθ b t u'( ct Recall decentralized vacancy posting described by γ βu'( c ( ρ γ = E t z w t u'( ct [ ] ( w = η z γθ η b t t t γ β u'( c ( ρ γ = Et t ( [ ] ( z η z γθ η b t u'( ct November 3, LABOR-MATCHING EFFICIENCY Socially-eicient vacancy posting described by γ β u'( c ( ρ γ = Et t ( [ ] ( z z γθ b t u'( ct Recall decentralized vacancy posting described by γ βu'( c ( ρ γ = E t z w t u'( ct [ ] ( w = η z γθ η b t t t γ β u'( c ( ρ γ = E ( [ ] ( t z η z γθ η b t u'( ct Eiciency in vacancy posting requires η =! November 3,

8 HOSIOS CONDITION Cobb-Douglas matcing tecnology Nas bargaining Pareto-optimal level o job-creation requires η = Hosios (990 ReStud November 3, HOSIOS CONDITION Cobb-Douglas matcing tecnology Nas bargaining Pareto-optimal level o job-creation requires η = Hosios (990 ReStud Intuition: searc activity generates eternalities One etra individual (irm searcing or a job (worker lowers te probability tat all oter individuals (irms will ind a matc but raises te probability tat all oter irms (individuals will ind a matc November 3,

9 HOSIOS CONDITION Cobb-Douglas matcing tecnology Nas bargaining Pareto-optimal level o job-creation requires η = Hosios (990 ReStud Intuition: searc activity generates eternalities One etra individual (irm searcing or a job (worker lowers te probability tat all oter individuals (irms will ind a matc but raises te probability tat all oter irms (individuals will ind a matc Congestion eternality searc imposes bot positive and negative eternalities (on opposite sides o te market November 3, HOSIOS CONDITION Cobb-Douglas matcing tecnology Nas bargaining Pareto-optimal level o job-creation requires η = Hosios (990 ReStud Intuition: searc activity generates eternalities One etra individual (irm searcing or a job (worker lowers te probability tat all oter individuals (irms will ind a matc but raises te probability tat all oter irms (individuals will ind a matc Congestion eternality searc imposes bot positive and negative eternalities (on opposite sides o te market Nas bargaining: η governs te private returns to searc Sare o total matc surplus kept by individual Cobb-Douglas matcing: governs te social returns to searc Elasticity o aggregate number o matces wit respect to u November 3,

10 HOSIOS CONDITION Cobb-Douglas matcing tecnology Nas bargaining Pareto-optimal level o job-creation requires η = Hosios (990 ReStud Intuition: searc activity generates eternalities One etra individual (irm searcing or a job (worker lowers te probability tat all oter individuals (irms will ind a matc but raises te probability tat all oter irms (individuals will ind a matc Congestion eternality searc imposes bot positive and negative eternalities (on opposite sides o te market Nas bargaining: η governs te private returns to searc Sare o total matc surplus kept by individual Cobb-Douglas matcing: governs te social returns to searc Elasticity o aggregate number o matces wit respect to u Eiciency requires equating private and social returns: η = November 3, HOSIOS CONDITION Also olds under some more general conditions Endogenous searc intensity Endogenous vacancy posting intensity (Pissarides Capter 5 Pissarides (2000, p. 98:..we are not likely to ind intuition or it... RSW (2005 JEL p. 982: genuinely surprising result November 3,

11 HOSIOS CONDITION Also olds under some more general conditions Endogenous searc intensity Endogenous vacancy posting intensity (Pissarides Capter 5 Pissarides (2000, p. 98:..we are not likely to ind intuition or it... RSW (2005 JEL p. 982: genuinely surprising result Is te Hosios condition empirically relevant? Wo knows?...it s a nongeneric parameterization Noneteless as become a ocal point or calibrated models November 3, HOSIOS CONDITION Also olds under some more general conditions Endogenous searc intensity Endogenous vacancy posting intensity (Pissarides Capter 5 Pissarides (2000, p. 98:..we are not likely to ind intuition or it... RSW (2005 JEL p. 982: genuinely surprising result Is te Hosios condition empirically relevant? Wo knows?...it s a nongeneric parameterization Noneteless as become a ocal point or calibrated models Hosios eiciency emerges endogenously in competitive searc equilibrium concept Moen (997 JPE: basic static partial labor searc model A well-understood concept in labor teory, but little incorporation into DSGE models November 3,

12 COMPETITIVE SEARCH EQUILIBRIUM (CSE Question: can a competitive notion o wage-setting be entertained in a searc and matcing model? Would get away rom te non-genericity o te Hosios bargaining parameterization May be apriori an appealing way o describing labor markets Locating a irm or a worker is costly and time-consuming but once matced, wages are more or less determined by market orces, peraps wit little/no room or bargaining November 3, COMPETITIVE SEARCH EQUILIBRIUM (CSE Question: can a competitive notion o wage-setting be entertained in a searc and matcing model? Would get away rom te non-genericity o te Hosios bargaining parameterization May be apriori an appealing way o describing labor markets Locating a irm or a worker is costly and time-consuming but once matced, wages are more or less determined by market orces, peraps wit little/no room or bargaining Moen (997 JPE and Simer (996 te original implementations o CSE Static partial-equilibrium labor searc models Will implement in te contet o our ull DSGE labor-searc model Arseneau and Cug (2007 sow ow to model in ull DSGE ramework (goods-searc model November 3,

13 CSE BASICS OF ENVIRONMENT Need many markets and many irms To rationalize competition, so can operationalize decentralized wage-ormation process Inde continuum o labor submarkets by j e.g., local labor markets Witin a submarket j, many irms looking to ire workers Even witin a local labor market, coordination rictions in inding workers may eist Inde by i November 3, CSE BASICS OF ENVIRONMENT Need many markets and many irms To rationalize competition, so can operationalize decentralized wage-ormation process Inde continuum o labor submarkets by j e.g., local labor markets Witin a submarket j, many irms looking to ire workers Even witin a local labor market, coordination rictions in inding workers may eist Inde by i Unemployed individuals direct teir job searc towards a particular irm in a particular submarket Based on wages prevailing in tat submarket and at te irm Not random searc directed searc is key or concept o CSE Once searc is directed, random matcing process governs weter an individual gets a job matc ormation is still subject to rictions November 3,

14 CSE BASICS OF ENVIRONMENT Need many markets and many irms To rationalize competition, so can operationalize decentralized wage-ormation process Inde continuum o labor submarkets by j e.g., local labor markets Witin a submarket j, many irms looking to ire workers Even witin a local labor market, coordination rictions in inding workers may eist Inde by i Unemployed individuals direct teir job searc towards a particular irm in a particular submarket Based on wages prevailing in tat submarket and at te irm Not random searc directed searc is key or concept o CSE Once searc is directed, random matcing process governs weter an individual gets a job matc ormation is still subject to rictions Wages determined beore searc, not ater searc All parties direct searc according to posted wages November 3, CSE BASICS OF ENVIRONMENT Wages determined beore searc, not ater searc All parties direct searc according to posted wages Several equivalent ways to implement Perectly-competitive market-maker sector Individuals announce wages beore irms searc or workers Firms announce wages beore individuals searc or jobs November 3,

15 CSE BASICS OF ENVIRONMENT Wages determined beore searc, not ater searc All parties direct searc according to posted wages Several equivalent ways to implement Perectly-competitive market-maker sector Individuals announce wages beore irms searc or workers Firms announce wages beore individuals searc or jobs Te implementation we will pursue See RSW 2005 JEL survey or alternative implementations November 3, CSE BASICS OF ENVIRONMENT Wages determined beore searc, not ater searc All parties direct searc according to posted wages Several equivalent ways to implement Perectly-competitive market-maker sector Individuals announce wages beore irms searc or workers Firms announce wages beore individuals searc or jobs Te implementation we will pursue See RSW 2005 JEL survey or alternative implementations Idea o irm wage-posting/wage-announcement implementation Deine (epected payo unction to irm ij o inding an additional worker Deine (epected payo unction to individual searcing or/applying to a job at irm ij Firm ij maimizes its payo subject to te reaction unction deined by te individual s payo unction i.e., irm internalizes te eect o wages on te oter side o te market can already see ow congestion eternality issues will be taken care o November 3,

16 CSE BASICS OF ENVIRONMENT Wages determined beore searc, not ater searc All parties direct searc according to posted wages Several equivalent ways to implement Perectly-competitive market-maker sector Individuals announce wages beore irms searc or workers Firms announce wages beore individuals searc or jobs Te implementation we will pursue See RSW 2005 JEL survey or alternative implementations Idea o irm wage-posting/wage-announcement implementation Deine (epected payo unction to irm ij o inding an additional worker Deine (epected payo unction to individual searcing or/applying to a job at irm ij Firm ij maimizes its payo subject to te reaction unction deined by te individual s payo unction i.e., irm internalizes te eect o wages on te oter side o te market can already see ow congestion eternality issues will be taken care o Internalizing congestion eternalities would also be acieved by Individuals announcing wages taking into account reactions by irms Market maker calling out wages taking account reactions by bot sides o market November 3, CSE IMPLEMENTATION Firm ij payo unction described by vacancy-posting decision! ( ρ γ γ = ij t Et Ξ t z wij j Cost o posting a vacancy Epected beneit o posting a vacancy = (probability o matcing wit a worker (epected uture beneit o an additional worker November 3,

17 CSE IMPLEMENTATION Firm ij payo unction described by vacancy-posting decision! Cost o posting a vacancy ( ρ γ γ = ij t Et Ξ t z wij j Note ij subscripts: Matcing probability depends on tigtness o applications at irm ij but uture asset value o employee depends on market j conditions (i.e., replacement value depends on (sub-market Epected beneit o posting a vacancy conditions = (probability o matcing wit a worker (epected uture beneit o an additional worker November 3, CSE IMPLEMENTATION Firm ij payo unction described by vacancy-posting decision! Cost o posting a vacancy ( ρ γ γ = ij t Et Ξ t z wij j Value equations or an individual searcing or a matc at irm ij W( wij t = wi jt Et{ Ξ t ( ρ W( wij ρ U( wt } Note ij subscripts: Matcing probability depends on tigtness o applications at irm ij but uture asset value o employee depends on market j conditions (i.e., replacement value depends on (sub-market Epected beneit o posting a vacancy conditions = (probability o matcing wit a worker (epected uture beneit o an additional worker { } U( w = b βe W( w ( k ( θ U( w t t t t t t November 3,

18 CSE IMPLEMENTATION Firm ij payo unction described by vacancy-posting decision! Cost o posting a vacancy ( ρ γ γ = ij t Et Ξ t z wij j Value equations or an individual searcing or a matc at irm ij W( wij t = wi jt Et{ Ξ t ( ρ W( wij ρ U( wt } Note ij subscripts: Matcing probability depends on tigtness o applications at irm ij but uture asset value o employee depends on market j conditions (i.e., replacement value depends on (sub-market Epected beneit o posting a vacancy conditions = (probability o matcing wit a worker (epected uture beneit o an additional worker { } U( w = b βe W( w ( U( w t t t t t t Wit probability k (θ, individual gets tis payo Wit probability -k (θ, individual gets tis payo November 3, CSE IMPLEMENTATION Firm ij payo unction described by vacancy-posting decision! Cost o posting a vacancy ( ρ γ γ = ij t Et Ξ t z wij j Value equations or an individual searcing or a matc at irm ij W( wij t = wi jt Et{ Ξ t ( ρ W( wij ρ U( wt } Note ij subscripts: Matcing probability depends on tigtness o applications at irm ij but uture asset value o employee depends on market j conditions (i.e., replacement value depends on (sub-market Epected beneit o posting a vacancy conditions = (probability o matcing wit a worker (epected uture beneit o an additional worker { } U( w = b βe W( w ( U( w t t t t t t Wit probability k (θ, individual gets tis payo Wit probability -k (θ, individual gets tis payo Wit individuals (ouseolds optimally directing teir searc, te epected payo o searcing or/applying to a job at irm ij is W( w ( U( w = X t Payo o searcing at anoter irm or anoter submarket independent o ij November 3,

19 CSE IMPLEMENTATION Firm ij maimizes ( ρ γ γ = ij t Et Ξ t z wij j taking as constraint W( w ( U( w = X t Coice variables: w and θ (isomorpic to coosing v or a given number o searcers u November 3, CSE IMPLEMENTATION Firm ij maimizes ( ρ γ γ = ij t Et Ξ t z wij j taking as constraint Coice variables: w and θ (isomorpic to coosing v or a given number o searcers u First-order conditions W( w ( U( w = X t ϕ W '( w = 0 ( θ ( ρ γ ( θ Et Ξ t z wij ϕ t ( t ( t 0 ij W wij U w = θ j θ November 3,

20 CSE IMPLEMENTATION First-order conditions ϕ W '( w = 0 W (. = ϕ = ( θ ( ρ γ ( θ Et Ξ t z wij ϕ t ( t ( t 0 ij W wij U w = θ j θ November 3, CSE IMPLEMENTATION First-order conditions ϕ W '( w = 0 W (. = ϕ = ( θ ( ρ γ ( θ Et Ξ t z wij ϕ t ( t ( t 0 ij W wij U w = θ j θ = J(θ i irms are optimizing November 3,

21 CSE IMPLEMENTATION First-order conditions ϕ W '( w = 0 W (. = ϕ = ( θ ( ρ γ ( θ Et Ξ t z wij ϕ t ( t ( t 0 ij W wij U w = θ j θ Cobb-Douglas matcing muv (, = u v Combine and rearrange = J(θ i irms are optimizing muv (, k ( m(, u muv (, m( θ = =, = θ v θ = = θ = θ ( θ = ( θ θ ( θ = θ θ November 3, CSE IMPLEMENTATION First-order conditions ϕ W '( w = 0 W (. = ϕ = ( θ ( ρ γ ( θ Et Ξ t z wij ϕ t ( t ( t 0 ij W wij U w = θ j θ Cobb-Douglas matcing muv (, = u v Combine and rearrange = J(θ i irms are optimizing muv (, k ( m(, u muv (, m( θ = =, = θ v θ = = θ = θ ( θ = ( θ θ ( θ = θ θ (Competition witin submarket j and symmetry across submarkets: drop ij indices ( W( w U( w = ( J( w t t t November 3,

22 CSE IMPLEMENTATION First-order conditions ϕ W '( w = 0 W (. = ϕ = ( θ ( ρ γ ( θ Et Ξ t z wij ϕ t ( t ( t 0 ij W wij U w = θ j θ Cobb-Douglas matcing muv (, = u v Combine and rearrange (Competition witin submarket j and symmetry across submarkets: drop ij indices = J(θ i irms are optimizing muv (, k ( m(, u muv (, m( θ = =, = θ v θ = = θ = θ ( W( w U( w = ( J( w t t t ( θ = ( θ θ ( θ = θ θ Eactly te Nasbargaining saring rule wit endogenous emergence o Hosios condition (η =!!! November 3, CSE IMPLEMENTATION First-order conditions ϕ W '( w = 0 W (. = ϕ = ( θ ( ρ γ ( θ Et Ξ t z wij ϕ t ( t ( t 0 ij W wij U w = θ j θ Cobb-Douglas matcing muv (, = u v Combine and rearrange (Competition witin submarket j and symmetry across submarkets: drop ij indices = J(θ i irms are optimizing muv (, k ( m(, u muv (, m( θ = =, = θ v θ = = θ = θ ( W( w U( w = ( J( w t t t ( θ = ( θ θ ( θ = θ θ Inserting value equations and solving eplicitly or wage obviously gives same outcome as Nas-bargained wage wit η = Eactly te Nasbargaining saring rule wit endogenous emergence o Hosios condition (η =!!! November 3,

23 CSE INTEREPRETATIONS Mortensen and Pissarides (999 Handbook Capter p Price o time priced eiciently by markets in CSE Price o time generically mispriced in bargaining equilibrium ( Price o time = matcing probabilities, wic relect congestion eternalities Bargaining equilibrium eatures a particular type o market incompleteness: workers and irms cannot contract on eicient surplus saring beore meeting CSE eectively ills in tis missing market November 3, CSE INTEREPRETATIONS Mortensen and Pissarides (999 Handbook Capter p Price o time priced eiciently by markets in CSE Price o time generically mispriced in bargaining equilibrium ( Price o time = matcing probabilities, wic relect congestion eternalities Bargaining equilibrium eatures a particular type o market incompleteness: workers and irms cannot contract on eicient surplus saring beore meeting CSE eectively ills in tis missing market provided we re willing to assume/believe te strong degree o commitment built into CSE model (i.e., eac side o a job-matc would ave an incentive to try to renegotiate te posted wage once tey actually meet An open question in searc teory November 3,

24 CSE INTEREPRETATIONS Mortensen and Pissarides (999 Handbook Capter p Price o time priced eiciently by markets in CSE Price o time generically mispriced in bargaining equilibrium ( Price o time = matcing probabilities, wic relect congestion eternalities Bargaining equilibrium eatures a particular type o market incompleteness: workers and irms cannot contract on eicient surplus saring beore meeting CSE eectively ills in tis missing market provided we re willing to assume/believe te strong degree o commitment built into CSE model (i.e., eac side o a job-matc would ave an incentive to try to renegotiate te posted wage once tey actually meet An open question in searc teory CSE in principle an alternative equilibrium concept in searc models But turns out to be equivalent to bargaining equilibrium wit Hosios condition (At least in simple environments.will equivalence old in ricer environments?... Little eplored in DSGE contets Question: Would some types o market rictions, ta issues, etc break te equivalence between CSE and Nas-Hosios bargaining?... November 3, RELEVANCE OF HOSIOS CONDITION IN DSGE Optimal policy (monetary and/or iscal will depend on weter or not η = Yet anoter distortion (i η = not satisied or policy to respond to Deviation rom Friedman Rule can be used to correct searc eternalities (Cooley and Quadrini (2004 JET, Arseneau and Cug (2008 JME, Faia (2008 JEDC November 3,

25 RELEVANCE OF HOSIOS CONDITION IN DSGE Optimal policy (monetary and/or iscal will depend on weter or not η = Yet anoter distortion (i η = not satisied or policy to respond to Deviation rom Friedman Rule can be used to correct searc eternalities (Cooley and Quadrini (2004 JET, Arseneau and Cug (2008 JME, Faia (2008 JEDC Model dynamics can depend (noticeably on weter or not η = Wals (2005 RED November 3, RELEVANCE OF HOSIOS CONDITION IN DSGE Optimal policy (monetary and/or iscal will depend on weter or not η = Yet anoter distortion (i η = not satisied or policy to respond to Deviation rom Friedman Rule can be used to correct searc eternalities (Cooley and Quadrini (2004 JET, Arseneau and Cug (2008 JME, Faia (2008 JEDC Model dynamics can depend (noticeably on weter or not η = Wals (2005 RED Hosios issues arise in any DGE model wit any type o searc market Money searc models Roceteau and Wrigt (2005 Econometrica Aruoba and Cug (2007 Product searc models Hall (2007 Arseneau and Cug (2007 November 3,

26 Summary DSGE (LABOR SEARCH MODELS Searc models articulate trading rictions cannot instantaneously/costlessly ind trading partners An appealing description o labor markets Maybe o oter markets also November 3, Summary DSGE (LABOR SEARCH MODELS Searc models articulate trading rictions cannot instantaneously/costlessly ind trading partners An appealing description o labor markets Maybe o oter markets also Tractable to incorporate in DSGE models because o assumption o aggregate matcing unction November 3,

27 Summary DSGE (LABOR SEARCH MODELS Searc models articulate trading rictions cannot instantaneously/costlessly ind trading partners An appealing description o labor markets Maybe o oter markets also Tractable to incorporate in DSGE models because o assumption o aggregate matcing unction Too ad-oc or reduced-orm because o assumption o (black bo aggregate matcing riction? November 3, Summary DSGE (LABOR SEARCH MODELS Searc models articulate trading rictions cannot instantaneously/costlessly ind trading partners An appealing description o labor markets Maybe o oter markets also Tractable to incorporate in DSGE models because o assumption o aggregate matcing unction Too ad-oc or reduced-orm because o assumption o (black bo aggregate matcing riction? Te Simer Puzzle and attempted answers continue as do New Keynesian modelers incorporation o labor searc structure Provides cover or talking meaningully about te tradeos between inlation and unemployment i.e., seemingly resuscitates te original Pillips Curve, not te NK Pillips Curve (wic links inlation to marginal costs November 3,