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Sector-specific productivity shocks in a matching model

  • Wesselbaum, Dennis

Endogenous separation matching models have the shortcoming that they are barely able to replicate the Beveridge curve (i.e. the negative correlation between unemployment and vacancies) and business cycle statistics jointly. This paper builds upon the sectoral shock literature and combines its insights with the standard endogenous separation matching approach. We show that the endogenous matching model with sectoral shocks can generate an aggregate Beveridge curve and performs reasonably well in explaining business cycle facts, especially compared to the one-sector baseline model.

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File URL: http://www.sciencedirect.com/science/article/pii/S026499931100201X
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 6 ()
Pages: 2674-2682

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:6:p:2674-2682
DOI: 10.1016/j.econmod.2011.08.009
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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