Capital, endogenous separations, and the business cycle

Björn van Roye and Dennis Wesselbaum

No 1561, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: We implement capital in an endogenous separations New Keynesian matching model. In contrast to the vintage capital theory, we suggest a more general approach, such that workers have unrestricted access to a proportional share of the capital stock. We find that the introduction of capital generates an important channel for the transmission of aggregate productivity shocks, using capital-labor trade-off. The model generates higher volatilities of key variables and therefore enhances the performance of the matching model to generate stylized facts in response to an aggregate productivity shock. However, there is almost no difference for monetary policy shocks.

Keywords: Capital; Endogenous Separations; Search and Matching (search for similar items in EconPapers)
JEL-codes: E22 E32 J64 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1561

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