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Does the Shimer puzzle really exist in the American labour market?

Author

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  • Fumitaka Furuoka

    (University of Malaya)

Abstract

This paper employs a dynamic stochastic general equilibrium (DSGE) method to systematically compare Shimer's and Hagedorn–Manovskii's calibration approaches to the analysis of the Shimer puzzle. The findings indicate that adopting an appropriate calibration strategy may help with solving two aspects of the Shimer puzzle by generating more accurate standard errors for unemployment and elasticity of the v–u ratio with respect to productivity. However, there still remains a tendency to fail to generate an accurate standard deviation for vacancy, which is the unsolvable aspect of the Shimer puzzle.

Suggested Citation

  • Fumitaka Furuoka, 2021. "Does the Shimer puzzle really exist in the American labour market?," Economics Bulletin, AccessEcon, vol. 41(3), pages 1009-1025.
    • Handle: RePEc:ebl:ecbull:eb-20-00182
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Search model; Shimmer puzzle; Mortensen–Pissarides model; dynamic stochastic general equilibrium;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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