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The Cyclical Behavior of Equilibrium Unemployment and Vacancies Across OECD Countries

Author

Listed:
  • Pedro S. Amaral

    (Federal Reserve Bank of Cleveland)

  • Murat Tasci

    () (Federal Reserve Bank of Cleveland)

Abstract

We show that the inability of a standardly-calibrated labor search-and-matching model to account for labor market volatility extends beyond the U.S. to a set of OECD countries. That is, the volatility puzzle is ubiquitous. We argue cross-country data is helpful in scrutinizing between potential solutions to this puzzle. To illustrate this, we show that the solution proposed in Hagedorn and Manovskii (2008) continues to deliver counterfactually low volatility in countries where labor productivity persistence and/or steady-state job-finding rates are sufficiently low. Moreover, the model's ability to generate high enough volatility depends on vacancy-filling rate levels that seem counterfactual outside the U.S.

Suggested Citation

  • Pedro S. Amaral & Murat Tasci, 2014. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies Across OECD Countries," Koç University-TUSIAD Economic Research Forum Working Papers 1405, Koc University-TUSIAD Economic Research Forum.
  • Handle: RePEc:koc:wpaper:1405
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gabriele Cardullo & Marco Guerrazzi, 2016. "The Cyclical Volatility of Equilibrium Unemployment and Vacancies: Evidence From Italy," LABOUR, CEIS, vol. 30(4), pages 433-454, December.
    2. Chun-Hung Kuo & Hiroaki Miyamoto, 2016. "Unemployment and Wage Rigidity in Japan: A DSGE Model Perspective," Working Papers EMS_2016_06, Research Institute, International University of Japan.
    3. repec:eee:labeco:v:50:y:2018:i:c:p:156-179 is not listed on IDEAS
    4. Meradj Mortezapouraghdam, 2016. "Three Essays on the Role of Frictions in the Economy," Sciences Po publications info:hdl:2441/293qice3lj8, Sciences Po.
    5. Pedro Amaral, 2014. "The cyclicality of the Portuguese labour market: a macroeconomic perspective in the OECD context," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
    6. Ginters Buss, 2015. "Search-and-Matching Frictions and Labour Market Dynamics in Latvia," Working Papers 2015/04, Latvijas Banka.
    7. Pinter, Gabor, 2015. "House prices and job losses," Bank of England working papers 569, Bank of England.
    8. Marc A. C. Hafstead & Roberton C. Williams III, 2016. "Unemployment and Environmental Regulation in General Equilibrium," NBER Working Papers 22269, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Labor Market; Vacancies; Unemployment; OECD countries.;

    JEL classification:

    • 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

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