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Vacancy Persistence

  • Shigeru Fujita

This paper reevaluates the quantitative performance of the standard labor-market matching model developed by Mortensen and Pissarides with special attention to the behavior of vacancies, one of the key variables in the model. I first estimate trivariate vector autoregressions with gross worker flows and vacancies and identify an aggregate shock by imposing only minimal sign restrictions on the responses of worker flows and employment growth and no restrictions on the response of vacancies. The data strongly suggest a hump-shaped and persistent response of vacancies. The calibrated model, on the other hand, predicts that vacancies respond to aggregate shocks with no delay and are not persistent even though an aggregate productivity shock is assumed to be highly persistent. These problems in vacancy behavior also cause gross flow series to exhibit counterfactual cyclical properties

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Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2005 with number 191.

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Date of creation: 11 Nov 2005
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Handle: RePEc:sce:scecf5:191
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  1. Oliver Jean Blanchard & Peter Diamond, 1990. "The Cyclical Behovior of the Gross Flows of U.S. Workers," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(2), pages 85-156.
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  9. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March.
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  12. Marcelo Veracierto, 2002. "On the cyclical behavior of employment, unemployment and labor force participation," Working Paper Series WP-02-12, Federal Reserve Bank of Chicago.
  13. Hoyt Bleakley & Jeffrey C. Fuhrer, 1997. "Shifts in the Beveridge Curve, job matching, and labor market dynamics," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-19.
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  22. repec:cup:macdyn:v:1:y:1997:i:1:p:45-75 is not listed on IDEAS
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  26. Gadi Barlevy, 2002. "The Sullying Effect of Recessions," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 65-96.
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  29. Ricardo J. Caballero & Mohamad L. Hammour, 1996. "On the Timing and Efficiency of Creative Destruction," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 805-852.
  30. Merz, Monika, 1995. "Search in the labor market and the real business cycle," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 269-300, November.
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