Credit, Vacancies and Unemployment Fluctuations

Nicolas Petrosky-Nadeau

No 2009-E27, GSIA Working Papers from Carnegie Mellon University, Tepper School of Business

Abstract: The propagation properties of the standard search and matching model of equilibrium unemployment are significantly altered when vacancy costs require some external financing on frictional credit markets. The latter induce variation in the shadow cost of external funds of the cycle that greatly increase the elasticity of vacancy postings to productivity through two distinct channels: (i) a cost channel - a lowered shadow cost during an upturn as credit constraints are relaxed increases the incentive to post vacancies; (ii) a wage channel - the improved bargaining position of firms afforded by the lowered cost of vacancies limits of the upward pressure of market tightness on wages. As a result, the model can match the observed volatility of unemployment, vacancies and labor market tightness. Moreover, the progressive easing of financing constraints to innovations generates persistence in the response of market tightness and vacancies, a robust feature of the data and shortcoming of the standard model.

Date: 2009-11
New Economics Papers: this item is included in nep-bec, nep-dge and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://andrew.cmu.edu/user/npn/Credit_VU.pdf
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://andrew.cmu.edu/user/npn/Credit_VU.pdf [302 Moved Temporarily]--> https://www.andrew.cmu.edu/user/npn/Credit_VU.pdf)

Related works:
Journal Article: Credit, Vacancies and Unemployment Fluctuations (2014)
Working Paper: Credit, Vacancies and Unemployment Fluctuations (2008)
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:cmu:gsiawp:1258554433

Ordering information: This working paper can be ordered from
https://student-3k.t ... /gsiadoc/GSIA_WP.asp

Access Statistics for this paper

More papers in GSIA Working Papers from Carnegie Mellon University, Tepper School of Business Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890.
Bibliographic data for series maintained by Steve Spear (ss1f@andrew.cmu.edu).