Can the matching model account for Spanish unemployment?

Raquel Fonseca () and Rafael Muñoz
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Rafael Muñoz: Université Cataholique de Louvain and Université Cergy-Pontoise

Investigaciones Economicas, 2003, vol. 27, issue 2, 277-308

Abstract: This paper aims at explaining the dynamics of the Spanish labour market, focussing in particular on the high persistence of unemployment and the dynamics around the Beveridge curve. We develop a stochastic dynamic general equilibrium model in which we assume that the labour market may be characterised by coordination failures in the matching process between vacancies and the unemployed. The model is then calibrated and simulated for the Spanish economy. Two sources of disturbances are considered: a traditional technological shock that initiates movements along the Beveridge curve; and reallocation shocks that shift the Beveridge curve. Our results suggest that the model is capable of accounting for the main stylised facts characterising the Spanish labour market. We also analyse the movements around the Beveridge curve. Our results also indicate that reallocation shocks are the main source of shocks driving labour market dynamics.

Keywords: Technological shock; reallocation shock; matching process; Beveridge curve (search for similar items in EconPapers)
JEL-codes: E24 J64 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Can the matching model account for Spanish unemployment? (2002)
Working Paper: Can the Matching Model Account for Spanish Unemployment ? (1999)
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