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The quantitative importance of technology and demand shocks for unemployment fluctuations in a shopping economy

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  • Borys, Paweł
  • Doligalski, Paweł
  • Kopiec, Paweł

Abstract

We construct and estimate a business cycle model with search and matching frictions in the labor market and in the product market. We show that the dynamic structure of the model and the endogenous job separation rate are important to accurately represent the empirical responses to the technology and the demand shocks. Our main finding is that the demand shock explains at least 58% of the unemployment fluctuations in the US, while the technology shock accounts for the residual.

Suggested Citation

  • Borys, Paweł & Doligalski, Paweł & Kopiec, Paweł, 2021. "The quantitative importance of technology and demand shocks for unemployment fluctuations in a shopping economy," Economic Modelling, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:ecmode:v:101:y:2021:i:c:s0264999321001164
    DOI: 10.1016/j.econmod.2021.105527
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    More about this item

    Keywords

    Technology shocks; Demand shocks; Unemployment; Business cycles;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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