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Search Theories and Aggregate Demand

Author

Listed:
  • Annalisa Cristini

    (Department of Management, Economics and Quantitative Methods, University of Bergamo Via dei Caniana 2, 24126 Bergamo, ITALY)

  • Piero Ferri

    (Department of Management, Economics and Quantitative Methods, University of Bergamo Via dei Caniana 2, 24126 Bergamo, ITALY)

  • Anna Maria Variato

    (Department of Management, Economics and Quantitative Methods, University of Bergamo Via dei Caniana 2, 24126 Bergamo, ITALY)

Abstract

This paper analyzes search models within a framework of aggregate demand shocks and dominated by uncertainty. In this context, agents are bounded rational while wages are determined by some markup mechanism. Differently from the canonical search theories, unemployment is not only frictional but it can be dynamically determined by an unexpected fall in aggregate demand. Furthermore, by introducing stochastic productivity heterogeneity, a ¡°systemic unemployment¡±, due to both demand and supply aspects, can be generated. The model is cast in dynamic terms, while the main results are obtained by means of simulations.

Suggested Citation

  • Annalisa Cristini & Piero Ferri & Anna Maria Variato, 2015. "Search Theories and Aggregate Demand," Review of Economics & Finance, Better Advances Press, Canada, vol. 5, pages 55-65, August.
    • Handle: RePEc:bap:journl:150305
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    References listed on IDEAS

    as
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    More about this item

    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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