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Matching efficiency and business cycle fluctuations

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A large decline in the efficiency of the US labour market in matching unemployed workers and vacant jobs has been documented during the Great Recession. We use a simple New Keynesian model with search and matching frictions in the labour market to study the macroeconomic implications of matching efficiency shocks. We show that the propagation of these disturbances and their importance for business cycle fluctuations depend crucially on the form of hiring costs and on the presence of nominal rigidities.

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Paper provided by Reserve Bank of New Zealand in its series Reserve Bank of New Zealand Discussion Paper Series with number DP2012/06.

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Length: 35 p.
Date of creation: Oct 2012
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Handle: RePEc:nzb:nzbdps:2012/06

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Cited by:
  1. Sala, Luca & Söderström, Ulf & Trigari, Antonella, 2012. "Structural and Cyclical Forces in the Labor Market During the Great Recession: Cross-Country Evidence," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9167, C.E.P.R. Discussion Papers.
  2. Lawrence J. Christiano & Martin S. Eichenbaum & Mathias Trabandt, 2013. "Unemployment and business cycles," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 1089, Board of Governors of the Federal Reserve System (U.S.).
  3. Poilly, Céline & Wesselbaum, Dennis, 2014. "Evaluating labor market reforms: A normative analysis," Journal of Macroeconomics, Elsevier, Elsevier, vol. 39(PA), pages 156-170.
  4. Rebecca Craigie & David Gillmore & Nicolas Groshenny, 2012. "Matching workers with jobs:how well is the New Zealand labour market doing?," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, Reserve Bank of New Zealand, vol. 75, pages 3-12, December.
  5. Sedláček, Petr, 2014. "Match efficiency and firms' hiring standards," Journal of Monetary Economics, Elsevier, Elsevier, vol. 62(C), pages 123-133.
  6. Alejandro Justiniano, 2012. "Comment on "Structural and Cyclical Forces in the Labor Market during the Great Recession: Cross-Country Evidence"," NBER Chapters, National Bureau of Economic Research, Inc, in: NBER International Seminar on Macroeconomics 2012, pages 415-424 National Bureau of Economic Research, Inc.

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