In a sticky-price model with labor market search and habit persistence, Walsh (2005) shows that inertia in the interest rate policy helps to reconcile the inflation and output persistence with empirical observations for the US economy. We show that this finding is sensitive with regard to the...

Shimer (2005a) argues that the textbook equilibrium search model of unemployment explains less than 10% of the volatility in U.S. vacancies and unemployment when fluctuations are driven by productivity shocks. His paper as well as other recent work inspired by it are reviewed and extended here....

Shimer (2005) demonstrated that aggregate productivity shocks in a standard matching model cause fluctuations in key labor market statistics---such as the job-finding rate, the vacancy/unemployment ratio, and the unemployment rate---that are too small by an order of magnitude. This paper shows...

Two thirds of US unemployment volatility is due to fluctuations in workers' job finding rate. In search and matching models, aggregate productivity shocks generate such fluctuations: through firms recruiting effort, they affect the rate at which workers and firms come into contact....

If entitlement to UI benefits must be earned with employment, generous UI is an additional benefit to working, so, by itself, it promotes job creation. If individuals are risk neutral, then there is a UI contribution scheme that eliminates any effect of UI on employment decisions. As with...

Unemployment during and after the Great Recession has been persistently high. One concern is that the housing bust reduced geographical mobility and prevented workers from moving for jobs. We characterize flows out of unemployment that are related to geographical mobility to construct an upper...

What accounts for the significant real effects of monetary policy shocks? And what accounts for the persistent and hump shaped responses of output and inflation in response to such shocks? These questions are investigated in a model that incorporates labor market search, habit persistence,...

We develop a life-cycle model of the labor market in which different worker-firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment...

study the efficiency of search equilibrium under decreasing returns to labor in production. Firms can sign long-term contracts with their workers which give them incentives to maximize the joint surplus associated with their relationship. When the firm hires a new worker, the terms of the...

This paper studies the relationship between disembodied technological progress and unemployment in a standard search-matching model. We find that the sign of the correlation crucially depends on the degree of idiosyncratic uncertainty. The analysis uncovers a new effect whereby an increase in...