claims on business income also rise. According to the leading view of unemployment-the Diamond-Mortensen-Pissarides model …-when the incentive for job creation falls, the labor market slackens and unemployment rises. Employers recover their … when the discount rate rises. Thus high discount rates imply high unemployment. This paper does not explain why the …

-cycle-frequency fluctuations in unemployment and job vacancies in response to shocks of a plausible magnitude. In the U.S., the vacancy-unemployment … vacancy-unemployment ratio and labor productivity have nearly the same variance. I establish this claim both using analytical … small movement along a downward sloping Beveridge curve (unemployment-vacancy locus). A shock to the job destruction rate …