Investment-Specific Technology Shocks and Labor Market Frictions
AbstractThis paper studies the implications of technical progress through investment-specific technical change in a business cycle model with search and matching frictions and endogenous job destruction. The interaction between the capital formation needed to reap the benefits of an investment-specific technology shock and gradual labor-market matching, generates hump-shaped, persistent responses in output, vacancies, and unemployment. The endogenous job destruction decision also leads to small but persistent endogenous fluctuations in total factor productivity. Simulations suggest a limited role for investment-specific technology shocks as a source of business cycle fluctuations compared to a standard real business cycle model.
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Bibliographic InfoPaper provided by National Bank of Belgium in its series Working Paper Research with number 108.
Length: 43 pages
Date of creation: Jan 2007
Date of revision:
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LaborMarket Frictions; Investment-specific Technology Shocks; Business Cycles;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-17 (All new papers)
- NEP-BEC-2007-02-17 (Business Economics)
- NEP-DGE-2007-02-17 (Dynamic General Equilibrium)
- NEP-MAC-2007-02-17 (Macroeconomics)
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- Toledo Manuel & Silva José I, 2010.
"Investment-Specific Shocks and Cyclical Fluctuations in a Frictional Labor Market,"
The B.E. Journal of Macroeconomics,
De Gruyter, vol. 10(1), pages 1-39, April.
- Jose I. Silva & Manuel Toledo, 2010. "Investment-Specific Shocks and Cyclical Fluctuations in a Frictional Labor Market," 2010 Meeting Papers 852, Society for Economic Dynamics.
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