EconPapers    
Economics at your fingertips  
 

Competitive search equilibrium in a DSGE model

David Arseneau and Sanjay Chugh

No 929, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We show how to implement a competitive search equilibrium in a fully-specified DSGE environment. Competitive search, an equilibrium concept well-understood in labor market theory, offers an alternative to the commonly-used Nash bargaining in search-based macro models. Our simulation-based results show that business cycle fluctuations under competitive search equilibrium are virtually identical to those under Nash bargaining for a broad range of calibrations of Nash bargaining power. We also prove that business cycle fluctuations under competitive search equilibrium are exactly identical to those under Nash bargaining restricted to the popularly-used Hosios condition for search efficiency. This latter result extends the efficiency properties of competitive search equilibrium to a DSGE environment. Our results thus provide a foundation for researchers interested in studying business cycle fluctuations using search-based environments to claim that the sometimes-awkward assumption of bargaining per se does not obscure interpretation of results.

Keywords: Business cycles; Equilibrium (Economics); Econometric models (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-cmp and nep-dge
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.federalreserve.gov/pubs/ifdp/2008/929/default.htm (text/html)
http://www.federalreserve.gov/pubs/ifdp/2008/929/ifdp929.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:929

Access Statistics for this paper

More papers in International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier (ryan.d.wolfslayer@frb.gov).

 
Page updated 2025-01-01
Handle: RePEc:fip:fedgif:929