We use a standard New Keynesian model of a small open economy, extended to include a government sector, to investigate the Great Depression in Australia. A calibrated model with a fixed exchange rate regime, similar to the gold standard, does well in replicating the dynamics of output during the...

We examine the implications of changes in the skill distribution on the equilibrium matching process and the job finding rate, using a directed search approach. Worker abilities are selected from a distribution while firms face heterogeneous entry costs and direct their job offers to workers. We...

In the 1980s there was an increase in cross-sectional wage inequality while simultaneously there was a decrease in the time series volatility of aggregate output. This paper argues that increased efficiency of the labor market may help explain both features of the data. Increases in labor market...

This paper modifies the standard Mortensen and Pissarides model by introducing an endogenous decision of individuals to either become entrepreneurs or workers. This modification has little impact upon the qualitative properties of the standard Mortensen and Pissarides model. However, it can...

This paper examines the allocation of heterogeneous workers across sectors of an economy in which workers are able to direct their search towards particular firms. We find that search frictions, in addition to causing unemployment, may result in an inefficient allocation of labor. This result...

This paper examines the development of wage inequality in the context of a Burdett- Mortensen (1998) model that is extended to incorporate worker heterogeneity through skill requirements in the production process. In this environment, wage dispersion is a natural consequence of firms pursuing...

We examine the implications of worker heterogeneity on the equilibrium matching process, using a directed search model. Worker abilities are selected from a general distribution, subject to some weak regularity requirements, and the firms direct their job offers to workers. We identify...

This paper modifies the standard Mortensen and Pissarides model by introducing an endogenous decision of individuals to either become entrepreneurs or workers. This modification has little impact upon the qualitative properties of the standard Mortensen and Pissarides model. However, it can...