Business Cycles in the Equilibrium Model of Labor Search and Self-Insurance
AbstractThis paper studies the cyclical properties the standard Mortensen-Pissarides model of labor search and matching embedded in the real business cycles model with capital, risk-averse agents, and lack of private insurance against unemployment risk. The model enables a direct comparison between the business cycle implications of the model and the U.S. aggregate data. It is found that the model with Nash bargaining wage setting rule fails to replicate the volatility of unemployment and vacancies observed in data, as shown in Shimer(2005) using the model without capital
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Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2006 with number 426.
Date of creation: 04 Jul 2006
Date of revision:
Business Cycles; Labor markets Search Matching;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: 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
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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