Shimer (2005) argues that the Mortensen-Pissarides (MP) model of unemployment lacks an amplification mechanism because … it generates less than 10 percent of the observed business cycle fluctuations in unemployment given labor productivity … correctly identify the shocks driving unemployment. Using a New-Keynesian framework to control for the endogeneity of …

This paper presents new empirical evidence on the cyclical behavior of US unemployment that poses a challenge to … standard search and matching models. The correlation between cyclical unemployment and the cyclical component of labor …

model does a good job of accounting for the joint behavior of labor and goods markets, as well as inflation, during the … capital played critical roles in accounting for the small size of the drop in inflation that occurred during the Great …

to the aggregate economy and that nondefense spending (growth) appears to be white noise. Further, the unemployment rate … has a very high coherency at the business cycle frequencies with unemployment insurance but far smaller coherency with …

and spending-policy actions, for short--in the United States. First, we estimate simple models of defense expenditures …