A note on the competitive search model of Azariadis and Pissarides
In this short note, I reinvestigate a recent paper of Azariadis and Pissarides (Unemployment dynamics with international capital mobility, European Economic Review, 2007(51), 27-48) where wages are determined in a competitive search setting. I show that their equation on the equilibrium wage rate is incorrect. I derive a correct wage equation and perform the numerical analysis. The correction does not change their result and high capital mobility still raises the variability of the unemployment rate.
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- Azariadis, Costas & Pissarides, Christopher A., 2007.
"Unemployment dynamics with international capital mobility,"
European Economic Review,
Elsevier, vol. 51(1), pages 27-48, January.
- Costas Azariadis & Christopher Pissarides, 2007. "Unemployment dynamics with international capital mobility," LSE Research Online Documents on Economics 2476, London School of Economics and Political Science, LSE Library.
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