6 The last step is to plug our expression for job finding into equation (2), the steadystate unemployment rate, yielding equation (5). Equation (5) shows how vacancies affect the unemployment rate. To illustrate this relationship, I solve equation (5) for different values of 𝑉𝑉 and 𝑠𝑠, holding the matching efficiency parameters constant.
This latter factor indeed comes very close to a New Keynesian type interpretation of the higher sensitivity of inflation to the underlying economic conditions, where different degrees of strategic complementarities in price setting can indeed be viewed as influencing the coefficient attached to slack (or, rather, the marginal cost of production) in the Phillips curve condition.