Land prices and unemployment

Zheng Liu, Jianjun Miao and Tao Zha

Journal of Monetary Economics, 2016, vol. 80, issue C, 86-105

Abstract: We integrate the housing market and the labor market in a dynamic general equilibrium model with credit and search frictions. We argue that the labor channel, combined with the standard credit channel, provides a strong transmission mechanism that can deliver a potential solution to the Shimer (2005) puzzle. The model is confronted with U.S. macroeconomic time series. The estimation results account for two prominent facts observed in the data. First, land prices and unemployment move in opposite directions over the business cycle. Second, a shock that moves land prices also generates the observed large volatility of unemployment.

Keywords: Housing and labor markets; Labor channel; Real wage rigidity; Intensive and extensive margins; Unemployment (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (38)

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Related works:
Working Paper: Land Prices and Unemployment (2015)
Working Paper: Land prices and unemployment (2013)
Working Paper: Land Prices and Unemployment (2013)
Working Paper: Land Prices and Unemployment (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:80:y:2016:i:c:p:86-105

DOI: 10.1016/j.jmoneco.2016.05.001

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