The dynamic Beveridge curve

Shigeru Fujita and Garey Ramey

No 05-22, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: In aggregate U.S. data, exogenous shocks to labor productivity induce highly persistent and hump-shaped responses to both the vacancy-unemployment ratio and employment. The authors show that the standard version of the Mortensen-Pissarides matching model fails to replicate this dynamic pattern due to the rapid responses of vacancies. They extend the model by introducing a sunk cost for creating new job positions, motivated by the well-known fact that worker turnover exceeds job turnover. In the matching model with sunk costs, vacancies react sluggishly to shocks, leading to highly realistic dynamics

Keywords: Employment; Unemployment (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (28)

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Related works:
Working Paper: The Dynamic Beveridge Curve (2006)
Working Paper: The Dynamic Beveridge Curve (2005)
Working Paper: The Dynamic Beveridge Curve (2005)
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