Labor Market Volatility in a Fully Specified RBC Search Model : An Analytical Investigation
Using computational methods, Atolia, Gibson, and Marquis (2018) (AGM) show that the Hagedorn and Manovskii's (2008) (HM) calibration strategy fails to solve the Shimer puzzle in a fully specified Real Business Cycle (RBC) search model. A fully specified RBC search model refers to a search-and-matching framework which includes a nonlinear production function such as a standard Cobb-Douglas specification, and a variety of commonly used utility specifications. However, AGM do not provide a mathematical proof to analytically support their results. This paper attempts to complement their study by providing tractable mathematical proof. The paper analytically shows that the presence of a non-linear production function with physical capital input in a search-and-matching framework sharply reduces the elasticity of labor market volatility with respect to labor productivity by about 3 percent under the HM calibration
Year of publication: |
[2022]
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Authors: | Tsasa, Jean-Paul |
Publisher: |
[S.l.] : SSRN |
Subject: | Suchtheorie | Search theory | Volatilität | Volatility | Arbeitsmarkt | Labour market | Real-Business-Cycle-Theorie | Real business cycle model | Arbeitsuche | Job search |
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