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Mismatch shocks and unemployment during the Great Recession

Francesco Furlanetto () and Nicolas Groshenny

No 2013/16, Working Paper from Norges Bank

Abstract: We investigate the macroeconomic consequences of .uctuations in the effectiveness of the labor-market matching process with a focus on the Great Recession. We conduct our analysis in the context of an estimated medium-scale DSGE model with sticky prices and equilibrium search unemployment that features a shock to the matching efficiency (or mismatch shock). We find that this shock is almost irrelevant for unemployment fluctuations in normal times. However, it plays a somewhat larger role during the Great Recession when it contributes to raise the actual unemployment rate by 1.25 percentage points and the natural rate by 2 percentage points. Moreover, it is the only shock that generates a positive conditional correlation between unemployment and vacancies.

Keywords: Search and marketing frictions; Unemployment; Natural rates (search for similar items in EconPapers)
JEL-codes: E32 C51 C52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
Date: 2013-06-28
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https://www.norges-bank.no/en/news-events/news-pub ... pers/2013/WP-201316/

Related works:
Journal Article: Mismatch Shocks and Unemployment During the Great Recession (2016) Downloads
Working Paper: Mismatch Shocks and Unemployment During the Great Recession (2015) Downloads
Working Paper: Mismatch Shocks and Unemployment During the Great Recession (2015) Downloads
Working Paper: Mismatch Shocks and Unemployment During the Great Recession (2014) Downloads
Working Paper: Mismatch Shocks and Unemployment During the Great Recession (2014) Downloads
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