Vacancies and Unemployment in Australia
"This article examines the extent to which the Mortensen-Pissarides model of labour market search can quantitatively match business cycle fluctuations in Australia. With productivity and job-separation-rate shocks, the model fails to produce substantial volatility among unemployment or vacancies, a result similar to" "Shimer's (2005)" "findings for the United States. Examining a broader range of shocks significantly increases the magnitude of business cycle fluctuations, but still only explains roughly 25 per cent of labour market volatility. The implied volatility of wages in the model is similar to that in the data and hence excessive wage flexibility is unlikely to be central to the failure of the model as claimed in the literature." Copyright (c)2010 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.
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Volume (Year): 43 (2010)
Issue (Month): 2 ()
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