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Credit, Vacancies and Unemployment Fluctuations

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  • Nicolas Petrosky-Nadeau

    (Carnegie Mellon University)

Abstract

Propagation in equilibrium models of search unemployment is altered when vacancy costs require some external financing on frictional credit markets. The easing of financing constraints during an expansion as firms accumulate net worth reduces the opportunity cost for resources allocated to job creation. The dynamics of market tightness are affected by (i) a cost channel, increasing the incentive to recruit for a given benefit from a new hire, and (ii) a wage channel, whereby firms' improved bargaining position limits the upward pressure of market tightness on wages. Agency related credit frictions endogenously generate persistence in the dynamics of labor-market tightness, and have a moderate endogenous effect on amplification. (Copyright: Elsevier)

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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 17 (2014)
Issue (Month): 2 (April)
Pages: 191-205

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Handle: RePEc:red:issued:12-42

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Keywords: Vacancies and unemployment dynamics; Search and matching; Credit-market frictions;

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References

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Citations

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Cited by:
  1. Petrosky-Nadeau, Nicolas & Wasmer, Etienne, 2010. "The Cyclical Volatility of Labor Markets under Frictional Financial Markets," IZA Discussion Papers 5131, Institute for the Study of Labor (IZA).
  2. Joseph Mullins & Gaston Navarro & Julio Blanco, 2013. "Equilibrium Default and Slow Recoveries," 2013 Meeting Papers 694, Society for Economic Dynamics.
  3. Nicolas Petrosky-Nadeau, . "TFP during a Credit Crunch," GSIA Working Papers 2010-E70, Carnegie Mellon University, Tepper School of Business.
  4. Nicolas Petrovsky-Nadeau & Etienne Wasmer, 2011. "Macroeconomic Dynamics in a Model of Goods, Labor and Credit Market Frictions," Sciences Po publications info:hdl:2441/5l6uh8ogmqi, Sciences Po.
  5. Tommaso Monacelli & Vincenzo Quadrini & Antonella Trigari, 2011. "Financial Markets and Unemployment," NBER Working Papers 17389, National Bureau of Economic Research, Inc.
  6. Atanas Hristov, 2010. "The High Sensitivity of Employment to Agency Costs: The Relevance of Wage Rigidity," SFB 649 Discussion Papers SFB649DP2010-044, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  7. repec:hal:cesptp:halshs-00389762 is not listed on IDEAS
  8. Etienne Wasmer & Nicolas Petrosky-Nadeau, 2011. "Propagation in a Model of Goods, Labor and Financial Market Frictions," 2011 Meeting Papers 119, Society for Economic Dynamics.
  9. Yahong Zhang, 2011. "Financial Factors and Labour Market Fluctuations," Working Papers 11-12, Bank of Canada.
  10. repec:spo:wpecon:info:hdl:2441/5l6uh8ogmqildh09h48226q18 is not listed on IDEAS
  11. Petra Marotzke, 2011. "Macroeconomic Stability and Wage Inequality: A Model with Credit and Labor Market Frictions," Working Paper Series of the Department of Economics, University of Konstanz 2011-38, Department of Economics, University of Konstanz.
  12. Dromel, Nicolas L. & Kolakez, Elie & Lehmann, Etienne, 2010. "Credit constraints and the persistence of unemployment," Labour Economics, Elsevier, vol. 17(5), pages 823-834, October.
  13. Atanas Hristov, 2009. "Credit Frictions and Labor Market Dynamics," Working Paper / FINESS 7.3, DIW Berlin, German Institute for Economic Research.
  14. Francesco Zanetti & Haroon Mumtaz, 2013. "The Effect of Labor and Financial Frictions on Aggregate Fluctuations," Economics Series Working Papers 690, University of Oxford, Department of Economics.

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