The Macroeconomics of Labor and Credit Market Imperfections

Etienne Wasmer and Philippe Weil

American Economic Review, 2004, vol. 94, issue 4, 944-963

Abstract: Credit market imperfections influence the labor market and aggregate economic activity. In turn, macroeconomic factors have an impact on the credit sector. To assess these effects in a tractable general-equilibrium framework, we introduce endogenous search frictions, in the spirit of Peter Diamond (1990), in both credit and labor markets. We demonstrate that credit frictions amplify macroeconomic volatility through a financial accelerator. The magnitude of this general-equilibrium accelerator is proportional to the credit gap, defined as the deviation of actual output from its perfect credit market level. We explore various extensions, notably endogenous wages.

Date: 2004
Note: DOI: 10.1257/0002828042002525
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (251)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/0002828042002525 (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: The Macroeconomics of Labour and Credit Market Imperfections (2002)
Working Paper: The Macroeconomics of Labor and Credit Market Imperfections (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:94:y:2004:i:4:p:944-963

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().