In the last few decades there is a clear shift of the U.S. economy from the non-service sector to the service sector. We document the patterns of changes in the employment share in services, the transition rates of workers between the two sectors and between different employment status, the...

This paper contributes to the search theory of unemployment by endogenously generating matching functions for skilled and unskilled workers from a wage-posting game. The model is capable of producing a positive skill premium and a positive wage differential among homogeneous unskilled workers....

This paper is the first step in the integration of the (search-theoretic) microfoundation of monetary theory into the fruitful analysis by Lucas (1990). I construct two search models, in which fiat money coexists in equilibrium with default-free nominal bonds issued by the government, and then...

We construct a dynamic equilibrium model where there is costly search in the goods market and the labor market. Incorporating shocks to money growth and productivity, we calibrate the model to the US time series data to examine the model's quantitative predictions on aggregate variables and, in...

The objective here is to evaluate the quantitative importance of financial frictions in business cycles. The analysis shows that a negative financial shock can cause aggregate investment, employment and consumption to fall with output. Despite this realistic comovement among macro quantities, a...