IDEAS home Printed from
   My bibliography  Save this paper

interaction between demand for labor and consumption over the business cycle


  • Wouter Den Haan

    (London School of Economics)


This paper develops a framework with a standard labor market matching friction and a friction in commodities markets which leads to firms not always selling everything being produced and thus to inventory accumulation. A savings glut can lead to a downward spiral in which reductions in consumer demand and demand for workers reinforce each other. Key is that the need for firms to finance inventories provides an outlet for the additional savings, so that there is no or not enough downward pressure on interest rates to kill the savings glut. These results do not require sticky prices and/or sticky wages.

Suggested Citation

  • Wouter Den Haan, 2012. "interaction between demand for labor and consumption over the business cycle," 2012 Meeting Papers 272, Society for Economic Dynamics.
  • Handle: RePEc:red:sed012:272

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed012:272. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.