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Do Financial Market Imperfections Affect the Cyclicality of Employment?

Author

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  • João Ejarque

    (Institute of Economics, University of Copenhagen)

Abstract

In this paper I show that the idea that firms faced with a liquidity constraint display "excess sensitivity" of employment to shocks is not correct. The employment decision is independent of the financing constraint and artificial data shows that there is no such excess sensitivity.

Suggested Citation

  • João Ejarque, 2002. "Do Financial Market Imperfections Affect the Cyclicality of Employment?," Discussion Papers 02-10, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:0210
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    References listed on IDEAS

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    More about this item

    Keywords

    employment volatility; investment; Q theory;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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