Real Business Cycles with Involuntary Unemployment

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Real Business Cycles with Involuntary Unemployment

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Galí, Jordi

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Jordi Gali

Abstract

We develop and analyse a real business cycle model in which both goods and labour markets are characterized by imperfect competition. In equilibrium, unemployment emerges as the result of the market power exercised by insiders at the firm level. We show that a calibrated version of the model is capable of generating both a procyclical labour supply and a countercyclical unemployment rate, in a way qualitatively consistent with US data.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1206.

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Date of creation: Jun 1995
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Handle: RePEc:cpr:ceprdp:1206

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Paper
- Gali, Jordi, 1995. "Real Business Cycles with Involuntary Unemployment," Working Papers 95-12, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]

Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Julio J. Rotemberg & Michael Woodford, 1991. "Markups and the Business Cycle," NBER Chapters, in: NBER Macroeconomics Annual 1991, Volume 6, pages 63-140 National Bureau of Economic Research, Inc. [Downloadable!]
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Other versions:
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Other versions:
- Jean-Pierre DANTHINE & John B. DONALDSON, 1991. "Risk Sharing in the Business Cycle," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 9109, Université de Lausanne, Faculté des HEC, DEEP.
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Other versions:
- Greenwood, J. & MacDonald, G. & Zhang, J.G., 1994. "The Cyclical Behavior of Job Creation and Job Destruction: A Sectoral Model," RCER Working Papers 394, University of Rochester - Center for Economic Research (RCER).
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Other versions:
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Greenwood, Jeremy & Huffman, Gregory W., 1991. "Tax analysis in a real-business-cycle model : On measuring Harberger triangles and Okun gaps," Journal of Monetary Economics, Elsevier, vol. 27(2), pages 167-190, April. [Downloadable!] (restricted)
Other versions:
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- Greenwood, J. & Huffman, G., 1991. "Tax Analysis in A Real Business Cycle Model: On Measuring Harberger Triangles and Okun Gaps," UWO Department of Economics Working Papers 9103, University of Western Ontario, Department of Economics.
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Stephen P Millard, . "The effects of increased labour market flexibility in the United Kingdom: theory and practice," Bank of England working papers 109, Bank of England. [Downloadable!]
Stephen Millard & Andrew Scott & Marianne Sensier, . "Business cycles and the labour market can theory fit the facts?," Bank of England working papers 93, Bank of England. [Downloadable!]

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