Macroeconomic Slack

This course will cover research topics related to macroeconomic slack, both on the labor market (unemployment) and on the product market (idleness). It will address the following questions: Why does slack exist at the macroeconomic level? Why does slack vary over time? And how is this related to price flexibility or rigidity? What is the socially optimal level of slack? How should monetary policy respond to fluctuations in slack over the business cycle? How should fiscal policy respond to fluctuations in slack over the business cycle? What happens to slack at the zero lower bound?