Michaillat, Pascal; Saez, Emmanuel - W.E. Upjohn Institute for Employment Research - 2014
This paper develops a model of unemployment fluctuations. The model keeps the architecture of the Barro and Grossman … (1971) general disequilibrium model but replaces the disequilibrium framework on the labor and product markets by a matching … flexible to completely rigid. With some price rigidity, aggregate demand influences unemployment through a simple mechanism …