Credit, Vacancies and Unemployment Fluctuations

Nicolas Petrosky-Nadeau

Review of Economic Dynamics, 2014, vol. 17, issue 2, 191-205

Abstract: Propagation in equilibrium models of search unemployment is altered when vacancy costs require some external financing on frictional credit markets. The easing of financing constraints during an expansion as firms accumulate net worth reduces the opportunity cost for resources allocated to job creation. The dynamics of market tightness are affected by (i) a cost channel, increasing the incentive to recruit for a given benefit from a new hire, and (ii) a wage channel, whereby firms' improved bargaining position limits the upward pressure of market tightness on wages. Agency related credit frictions endogenously generate persistence in the dynamics of labor-market tightness, and have a moderate endogenous effect on amplification. (Copyright: Elsevier)

Keywords: Vacancies and unemployment dynamics; Search and matching; Credit-market frictions (search for similar items in EconPapers)
JEL-codes: E32 E44 J63 J64 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (62)

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DOI: 10.1016/j.red.2013.10.001

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