EconPapers    
Economics at your fingertips  
 

Financial factors and labor market fluctuations

Yahong Zhang ()

Economic Modelling, 2018, vol. 74, issue C, 24-44

Abstract: The recent financial crisis has been associated with a significant rise in the unemployment rate in the U.S. To understand the impact of financial frictions and shocks on unemployment fluctuations, I develop a monetary DSGE model with explicit financial and labor market frictions. The model is estimated using U.S. data over the period of 1984Q1 to 2016Q4. I find that the model accounts well for the cyclical behavior of unemployment and vacancies observed in the data. The historical decomposition results show that financial wealth shocks contribute significantly to the rise in the unemployment rate following the recent financial crisis. Overall, I find that financial wealth shocks contribute more than 30 per cent of the fluctuations in unemployment and vacancies in the U.S. during the sample period.

Keywords: Financial frictions; Financial shocks; Unemployment; Search and matching models (search for similar items in EconPapers)
JEL-codes: E32 E44 J6 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999317304996
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Financial Factors and Labour Market Fluctuations (2011) Downloads
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:eee:ecmode:v:74:y:2018:i:c:p:24-44

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-03-31
Handle: RePEc:eee:ecmode:v:74:y:2018:i:c:p:24-44