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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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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. Nicolas Petrosky-Nadeau & Etienne Wasmer, 2014. "Macroeconomic Dynamics in a Model of Goods, Labor and Credit Market Frictions," Sciences Po publications, Sciences Po 2014-09, Sciences Po.
  3. 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, Department of Economics, University of Konstanz 2011-38, Department of Economics, University of Konstanz.
  4. 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.
  5. Atanas Hristov, 2009. "Credit Frictions and Labor Market Dynamics," Working Paper / FINESS, DIW Berlin, German Institute for Economic Research 7.3, DIW Berlin, German Institute for Economic Research.
  6. Joseph Mullins & Gaston Navarro & Julio Blanco, 2013. "Equilibrium Default and Slow Recoveries," 2013 Meeting Papers, Society for Economic Dynamics 694, Society for Economic Dynamics.
  7. Etienne Wasmer & Nicolas Petrosky-Nadeau, 2011. "Propagation in a Model of Goods, Labor and Financial Market Frictions," 2011 Meeting Papers, Society for Economic Dynamics 119, Society for Economic Dynamics.
  8. Tommaso Monacelli & Vincenzo Quadrini & Antonella Trigari, 2011. "Financial Markets and Unemployment," NBER Working Papers 17389, National Bureau of Economic Research, Inc.
  9. Francesco Zanetti & Haroon Mumtaz, 2013. "The Effect of Labor and Financial Frictions on Aggregate Fluctuations," Economics Series Working Papers, University of Oxford, Department of Economics 690, University of Oxford, Department of Economics.
  10. Yahong Zhang, 2011. "Financial Factors and Labour Market Fluctuations," Working Papers, Bank of Canada 11-12, Bank of Canada.
  11. Petrosky-Nadeau, Nicolas, 2013. "TFP during a credit crunch," Journal of Economic Theory, Elsevier, Elsevier, vol. 148(3), pages 1150-1178.
  12. Nicolas Dromel & Elie Kolakez & Etienne Lehmann, 2009. "Credit Constraints and the Persistence of Unemployment," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL halshs-00389762, HAL.
  13. repec:spo:wpecon:info:hdl:2441/5l6uh8ogmqildh09h48226q18 is not listed on IDEAS

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