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Endogenous Beveridge cycles and the volatility of unemployment

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  • Sniekers, F.J.T.

    () (University of Amsterdam)

Abstract

This paper aims to explain the magnitude and cyclical structure of the fluctuations in unemployment and vacancies. Adding demand externalities to an otherwise standard search and matching model reduces the need for exogenous shocks in explaining unemployment fluctuations. Under plausible parameter values, the equilibrium dynamics include a stable limit cycle that resembles the empirically observed counterclockwise cycles around the Beveridge curve. Quantitatively, these endogenous `Beveridge cycles' can explain half of the volatility and almost all persistence of unemployment without any exogenous forces, avoiding the amplification and propagation problems of the standard model.

Suggested Citation

  • Sniekers, F.J.T., 2013. "Endogenous Beveridge cycles and the volatility of unemployment," CeNDEF Working Papers 13-12, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  • Handle: RePEc:ams:ndfwpp:13-12
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    Cited by:

    1. Jan Eeckhout & Ilse Lindenlaub, 2015. "Unemployment cycles," IFS Working Papers W15/26, Institute for Fiscal Studies.
    2. Vincent Sterk, 2016. "The Dark Corners of the Labor Market," Discussion Papers 1603, Centre for Macroeconomics (CFM).
    3. Sterk, Vincent, 2016. "The dark corners of the labor market," LSE Research Online Documents on Economics 86244, London School of Economics and Political Science, LSE Library.
    4. repec:eee:jetheo:v:172:y:2017:i:c:p:451-477 is not listed on IDEAS

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