Monetary Policy and Unemployment

This paper has been prepared for the Handbook of Monetary Economics, edited by B. Friedman and M. Woodford. Many of the insights contained in the present paper are based on earlier joint work with Olivier Blanchard, who sparked my interest in the subject. I also thank the editors, Jan Eeckhout, Chris Pissarides, Carlos Thomas, and participants at the CREI Faculty Lunch and the Conference on "Key Development in Monetary Economics," for helpful comments at different stages of this project. Tomaz Cajner and Lien Laureys provided excellent research assistance. I acknowledge financial support from the European Research Council, the Ministerio de Ciencia e Innovación and the Government of Catalonia. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.

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