Business Cycles in the Equilibrium Model of Labor Search and Self-Insurance

Makoto Nakajima ()

No 426, Computing in Economics and Finance 2006 from Society for Computational Economics

Abstract: This paper studies the cyclical properties the standard Mortensen-Pissarides model of labor search and matching embedded in the real business cycles model with capital, risk-averse agents, and lack of private insurance against unemployment risk. The model enables a direct comparison between the business cycle implications of the model and the U.S. aggregate data. It is found that the model with Nash bargaining wage setting rule fails to replicate the volatility of unemployment and vacancies observed in data, as shown in Shimer(2005) using the model without capital

Keywords: Business Cycles; Labor markets Search Matching (search for similar items in EconPapers)
JEL-codes: E24 E32 J41 (search for similar items in EconPapers)
Date: 2006-07-04
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:sce:scecfa:426

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