in unemployment and vacancies but also wages, is the drop in consumption for the unemployed. In addition, explaining the …

workers only know the distribution of productivity in the economy. Although there is unemployment in equilibrium, the labor … equilibrium wage, while an increae in average productivity or a reduction in the variance reduces unemployment. It follows that if … recessions are chararacterized by low average productivity and a high variance, the model can explain large (un)employment …