Uncertainty shocks and unemployment dynamics

Malak Kandoussi () and Francois Langot
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Malak Kandoussi: EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay

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Abstract: Recent events suggest that uncertainty changes play a major role in U.S. labor market fluctuations. This study analyzes the impact of uncertainty shocks on unemployment dynamics. We develop a quantitative version of the Diamond–Mortensen–Pissarides (DMP) model, in which uncertainty shocks hit the economy. Given the significant nonlinearities of the DMP model, we show that the introduction of uncertainty shocks allows this textbook model to account for observed characteristics of the U.S. labor market dynamics, with reasonable values for calibrated parameters.

Keywords: Uncertainty shocks; Unemployment dynamics; Search and matching; Non-linearities (search for similar items in EconPapers)
Date: 2022-10
Note: View the original document on HAL open archive server: https://hal.science/hal-04204670v1
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Citations: View citations in EconPapers (2)

Published in Economics Letters, 2022, 219 (8), pp.110760. ⟨10.1016/j.econlet.2022.110760⟩

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Related works:
Journal Article: Uncertainty shocks and unemployment dynamics (2022)
Working Paper: Uncertainty Shocks and Unemployment Dynamics (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04204670

DOI: 10.1016/j.econlet.2022.110760

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