Unemployment, Capital and Hours: On the quantitative performance of a DSGE
AbstractThis paper shows that the standard Mortensen-Pissarides framework embedded in a RBC macroeconomic model with risk averse agents, capital and a labor-leisure choice has the ability to match all moments of the ac- tual US-unemployment rate and other labor market variables within tight bounds when estimated on aggregate output alone. It correctly predicts around 90% of the variation on business-cycle frequency. We describe the set of parameter values that generate these results and show that they lie in the space of commonly estimated or calibrated values in macroeconomic DSGE models. In addition we show that some wage setting arrangements like "right to manage" approaches typically employed in the literature will be unable to generate the observed fuctuations in unemployment rates and give the reason for their failure
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2006 with number 123.
Date of creation: 04 Jul 2006
Date of revision:
Find related papers by JEL classification:
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- 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-2006-07-15 (All new papers)
- NEP-DGE-2006-07-15 (Dynamic General Equilibrium)
- NEP-MAC-2006-07-15 (Macroeconomics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Makoto Nakajima, 2012.
"Business Cycles In The Equilibrium Model Of Labor Market Search And Self‐Insurance,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 399-432, 05.
- Makoto Nakajima, 2010. "Business cycles in the equilibrium model of labor market search and self-insurance," Working Papers 10-24, Federal Reserve Bank of Philadelphia.
- Holt Richard, 2008.
"Job Reallocation, Unemployment and Hours in a New Keynesian Model,"
The B.E. Journal of Macroeconomics,
De Gruyter, vol. 8(1), pages 1-47, August.
- Richard W P Holt, 2007. "Job Reallocation, Unemployment and Hours in a New Keynesian Model," ESE Discussion Papers 172, Edinburgh School of Economics, University of Edinburgh.
- Kuester, Keith, 2007.
"Real price and wage rigidities in a model with matching frictions,"
Working Paper Series
0720, European Central Bank.
- Keith Kuester & Goethe University, 2006. "Real Price and Wage Rigidities in a Model with Matching Frictions," Computing in Economics and Finance 2006 152, Society for Computational Economics.
- Keith Kuester, 2006. "Real Price and Wage Rigidities in a Model with Matching Frictions," 2006 Meeting Papers 546, Society for Economic Dynamics.
- Jung, Philip, 2007. "Optimal Taxation and (Female)-Labor Force Participation over the Cycle," MPRA Paper 8744, University Library of Munich, Germany, revised 13 May 2008.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.