Non-Walrasian Labor Markets and Real Business Cycles
AbstractThe standard Real Business Cycle literature mainly focuses on Walrasian models designed to fit the US institutional framework. Differences between the US and Europe, mostly evident in the labor market, suggest that a purely Walrasian model may be inappropriate to study European business cycles. We present a stochastic version of the dynamic general equilibrium model in Daveri and Maffezzoli (2000), where unemployment is generated by monopolistic unions, and calibrate it to reproduce several long-run features of the Italian and US economies. The properties of our model are compared to the corresponding ones of Rogerson and Wright's indivisible labor model. We focus on the standard business cycle statistics, the impulse response functions, and the ability to reproduce the cyclical compo nents of the main macroeconomic variables. We conclude that: (i) the business cycle statis tics are observationally equivalent in small samples; (ii) the impulse response functions of the Monopoly Union (MU) model show a higher degree of overall persistence; (iii) the MU model enjoys a statistically significative advantage in reproducing the Italian business cycles, while its alternative seems to better explain the US business cycles.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0004009.
Length: 49 pages
Date of creation: 31 May 2000
Date of revision:
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on A4; pages: 49; figures: included. 49 pages, zip file containing separate pdf files for boby, tables, and figures
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Real Business Cycle; General Equilibrium; Trade Union; Indivisible Labor;
Other versions of this item:
- Marco Maffezzoli, 2001. "Non-Walrasian Labor Markets and Real Business Cycles," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(4), pages 860-892, October.
- Marco Maffezzoli, . "Non-Walrasian Labor Markets and Real Business Cycles," Working Papers 167, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-02-14 (All new papers)
- NEP-DGE-2001-02-14 (Dynamic General Equilibrium)
- NEP-LAB-2001-02-14 (Labour Economics)
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