The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited
Recently, a number of authors have argued that the standard search model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies, given shocks of a plausible magnitude. We propose a new calibration strategy of the standard model that uses data on the cost of vacancy creation and cyclicality of wages to identify the two key parameters –- the value of nonmarket activity and the bargaining weights. Our calibration implies that the model is consistent with the data. (JEL E24, E32, J31, J63, J64)
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- Christopher A. Pissarides, 1992.
"Search Unemployment with on-the-job Search,"
CEP Discussion Papers
dp0074, Centre for Economic Performance, LSE.
- Michael J. Pries, 2004.
"Persistence of Employment Fluctuations: A Model of Recurring Job Loss,"
Review of Economic Studies,
Wiley Blackwell, vol. 71(1), pages 193-215, 01.
- Michael J. Pries, 2004. "Persistence of Employment Fluctuations: A Model of Recurring Job Loss," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 193-215.
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