Job Destruction and Propagation of Shocks

Garey Ramey, Wouter J. den Haan and Joel Watson
Authors registered in the RePEc Author Service: Wouter Denhaan ()

American Economic Review, 2000, vol. 90, issue 3, 482-498

Abstract: This paper considers propagation of aggregate shocks in a dynamic general-equilibrium model with labor-market matching and endogenous job destruction. Cyclical fluctuations in the job-destruction rate magnify the output effects of shocks, as well as making them much more persistent. Interactions between capital adjustment and the job-destruction rate play an important role in generating persistence. Propagation effects are shown to be quantitatively substantial when the model is calibrated using job-flow data. incorporating costly capital adjustment leads to significantly greater propagation.

JEL-codes: E24 E32 (search for similar items in EconPapers)
Date: 2000
Note: DOI: 10.1257/aer.90.3.482
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Citations: View citations in EconPapers (747)

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