in the discount factor. A comparison with the standard productivity shock is provided. Movements in the discount factor …In this paper we investigate the labor market dynamics in a matching model where fluctuations are driven by movements … that the canonical matching model under a very standard calibration is able to generate an important volatility of …

market sorting, and aggregate shocks. In response to a positive productivity shock, incentives to sort increase …I study a dynamic search-matching model with two-sided heterogeneity, a production complementarity that induces labor … disproportionately. Firms respond by posting additional vacancies, and the strength of the response is increasing in firm productivity …

We identify the main shock driving fluctuations in long‐horizon productivity expectations, consistent with theories of … TFP news. The identified shock induces strong comovement patterns in output, consumption, investment, employment, and … news shock. The model also matches the empirical patterns of vacancies, labor force participation, hours, and job …