Search Frictions on Product and Labor markets : Money in the Matching Function

This paper builds a macroeconomic model of equilibrium unemployment in which firms persistently face difficulties in selling their production and this affects their decisions to create jobs. Due to search-frictins on the product market, equilibrium unemployment is a U-shaped function of the ratio of total demand to total supply on this market. When prices are at their Competitive Search Equilibrium values, the unemployment rate is minimized. Yet, the Competitive Search Equilibrium is not efficient. Inflation is detrimental to unemployment.

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Year of publication:	2007-03-01
Authors:	Etienne, LEHMANN ; Bruno, VAN DER LINDEN
Institutions:	Institut de Recherche Économique et Sociale (IRES), École des Sciences Économiques de Louvain
Subject:	Equilibrium unemployment \| Matching \| Inflation \| Demand Constraints

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Extent:	application/pdf
Series:	Discussion Papers (ECON - Département des Sciences Economiques).
Type of publication:	Book / Working Paper
Language:	English
Notes:	The text is part of a series UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Sciences Economiques Number 2007013 4 pages long
Classification:	E12 - Keynes; Keynesian; Post-Keynesian ; E24 - Employment; Unemployment; Wages ; E31 - Price Level; Inflation; Deflation ; J63 - Turnover; Vacancies; Layoffs
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10004984870