The study looks at how changes in productivity and wages affect inflation and output in a unionized labor market. It shows that when productivity goes down, inflation decreases, but when wages go up, inflation increases. The Central Bank can adjust interest rates to stabilize the economy, but the response may not be one-to-one. The model suggests that the relationship between productivity shocks and employment depends on the type of monetary policy in place. The findings align with the idea that changes in employment are more volatile than changes in real wages.