This paper develops a theory characterizing the effects of fiscal policy on unemployment over the business cycle. The … theory is based on a model of equilibrium unemployment in which jobs are rationed in recessions. Fiscal policy in the form of … government spending on public-sector jobs reduces unemployment, especially during recessions: the fiscal multiplier …

This paper examines the relation between individual unemployment durations and incidence on the one hand, and the time … currently unemployed. We also allow for the composition of the inflow into unemployment to depend on calendar time at the moment … aggregate unemployment duration data, in which we allow for unobserved heterogeneity and correlated measurement errors. We do …

France, Germany, the United Kingdom and the United States - which any theory of unemployment ought to explain. The … business cycles. Key results are: flows into and out of unemployment are countercyclical; these flows move tightly together …, over both the cycle and the long run; the bulk of exits from unemployment actually represent job findings rather than exits …

doubles when unemployment rises from 5% to 8%. Theoretically, such countercyclicality arises because of a nonlinearity, namely … in recessions but large in expansions. Hence, government consumption reduces unemployment much more in recessions than in …

To generate big responses of unemployment to productivity changes, researchers have reconfigured matching models in … introducing costly acquisition of credit, or by positing government mandated unemployment compensation and layoff costs. All of … these redesigned matching models increase responses of unemployment to movements in productivity by diminishing the …

state and regulators are not necessarily independent. Among other things, we show that firms invest more, issue more debt …

leveraged banks’ precautionary demand for liquidity. When adverse asset shocks materialize, a bank’s ability to roll over debt …