Indeterminacy and search theory

Nicola Giammarioli

No 271, Working Paper Series from European Central Bank

Abstract: This paper investigates a dynamic general equilibrium model with search. In particular, search externalities are reflected by an increasing return to scale matching function, which may imply an indeterminate equilibrium. Hence, the model is capable to generate business fluctuations, driven by self-fulfilling belief, characterised by unemployment persistence. A numerical simulation shows that the degree of externalities needed for indeterminacy is not too far from existing empirical estimates and the implied dynamics of employment is richer than that of standard RBC models with search. JEL Classification: E10, E24, J64

Keywords: general equilibrium; indeterminacy; matching function; search theory (search for similar items in EconPapers)
Date: 2003-09
Note: 98954
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2003271

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