Capital, Endogenous Separations, and the Business Cycle
Abstract
We implement capital in an endogenous separations New Keynesian matching model. In contrast to the vintage capital theory, we suggest a more general approach, such that workers have unrestricted access to a proportional share of the capital stock. We find that the introduction of capital generates an important channel for the transmission of aggregate productivity shocks, using capital-labor trade-off. The model generates higher volatilities of key variables and therefore enhances the performance of the matching model to generate stylized facts in response to an aggregate productivity shock. However, there is almost no difference for monetary policy shocksDownload Info
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1561.Length: 25 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:kie:kieliw:1561
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Keywords: Capital; Endogenous Separations; Search and Matching;Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-07 (All new papers)
- NEP-BEC-2009-11-07 (Business Economics)
- NEP-DGE-2009-11-07 (Dynamic General Equilibrium)
- NEP-LAB-2009-11-07 (Labour Economics)
- NEP-MAC-2009-11-07 (Macroeconomics)
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