A New Keynesian analysis of industrial employment fluctuations

Miguel Casares

Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra from Departamento de Economía - Universidad Pública de Navarra

Abstract: This paper describes a model with sticky prices, search frictions and hours-clearing wages that provides firm differentiation across several dimensions: price, output, wage, employment and hours per worker. The connection between pricing and hiring decisions results in firm-level employment fluctuations that depend upon sticky prices, search costs, demand elasticity and labor supply elasticity. The calibrated model is able to match average US industrial employment volatility when assuming a small industrial size, providing one possible answer to Shimer (2005a)´s puzzle.

Keywords: search frictions; sticky prices; industrial employment (search for similar items in EconPapers)
JEL-codes: E3 J2 J3 J4 (search for similar items in EconPapers)
Pages: pages
Date: 2009
New Economics Papers: this item is included in nep-bec, nep-lab and nep-mac
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