Unemployment x New Keynesian Model (Galí et al.)

Unemployment in an estimated new keynesian model by Jordi Galí, Frank Smets and Rafael Wouters (05/2011). “We reformulate the Smets-Wouters (2007) framework by embed-ding the theory of unemployment proposed in Galí (2011 a.b). We estimate the resulting model using postwar U.S data, while treating the unemployment rate as an additional observable variable.”