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The quantitative importance of technology and demand shocks for unemployment fluctuations in a shopping economy

Paweł Borys, Paweł Doligalski and Paweł Kopiec

Economic Modelling, 2021, vol. 101, issue C

Abstract: We construct and estimate a business cycle model with search and matching frictions in the labor market and in the product market. We show that the dynamic structure of the model and the endogenous job separation rate are important to accurately represent the empirical responses to the technology and the demand shocks. Our main finding is that the demand shock explains at least 58% of the unemployment fluctuations in the US, while the technology shock accounts for the residual.

Keywords: Technology shocks; Demand shocks; Unemployment; Business cycles (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Date: 2021
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Working Paper: The Quantitative Importance of Technology and Demand Shocks for Unemployment Fluctuations in a Shopping Economy (2021) Downloads
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DOI: 10.1016/j.econmod.2021.105527

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