Non-Walrasian Labor Markets and Real Business CyclesMacroeconomics from EconWPA Abstract: The standard Real Business Cycle literature mainly focuses on Walrasian models designed to fit the US institutional framework. Differences between the US and Europe, mostly evident in the labor market, suggest that a purely Walrasian model may be inappropriate to study European business cycles. We present a stochastic version of the dynamic general equilibrium model in Daveri and Maffezzoli (2000), where unemployment is generated by monopolistic unions, and calibrate it to reproduce several long-run features of the Italian and US economies. The properties of our model are compared to the corresponding ones of Rogerson and Wright's indivisible labor model. We focus on the standard business cycle statistics, the impulse response functions, and the ability to reproduce the cyclical compo nents of the main macroeconomic variables. We conclude that: (i) the business cycle statis tics are observationally equivalent in small samples; (ii) the impulse response functions of the Monopoly Union (MU) model show a higher degree of overall persistence; (iii) the MU model enjoys a statistically significative advantage in reproducing the Italian business cycles, while its alternative seems to better explain the US business cycles. Keywords: Real Business Cycle; General Equilibrium; Trade Union; Indivisible Labor (search for similar items in EconPapers) Downloads: (external link) Related works: Access Statistics for this paper More papers in Macroeconomics from EconWPA |
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