The Quantitative Importance of Technology and Demand Shocks for Unemployment Fluctuations in a Shopping Economy

Pawel Borys, Pawel Doligalski and Paweł Kopiec ()

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: We construct and estimate a business cycle model with search and matching frictions in the labor market and in the product market. We show that the dynamic structure of the model and the endogenous job separation rate are important to accurately represent the empirical responses to the technology and the demand shocks. Our main finding is that the demand shock explains at least 58% of the unemployment fluctuations in the US, while the technology shock accounts for the residual.

Date: 2021-04-26
New Economics Papers: this item is included in nep-dge and nep-mac
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Journal Article: The quantitative importance of technology and demand shocks for unemployment fluctuations in a shopping economy (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:21/743

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