EconPapers    
Economics at your fingertips  
 

Dynamics of the planning solution in the discrete-time textbook model of labor market search and matching

Joydeep Bhattacharya () and Helle Bunzel

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: This paper takes a discrete-time adaptation of the continuous−time matching economy described in Pissarides (1990, 2000), and computes the solution to the dynamic planning problem. The solution is shown to be completely characterized by a first−order, non−linear map. We show that the map admits a unique stationary solution which is dynamically unstable. Oscillatory solutions are possible but there is no possibility of periodic solutions. The planner picks the initial condition that places the economy directly on the steady state. Our results are in sharp contrast to received wisdom on out−of−steady−state dynamics in the continuous−time decentralized version of the Pissarides model where adjustment to the steady state is non−instantaneous, and overshooting of vacancies is possible.

Date: 2003-11-24
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://lib.dr.iastate.edu/cgi/viewcontent.cgi?art ... on_las_workingpapers

Related works:
Working Paper: Dynamics of the Planning Solution in the Discrete-Time Textbook Model of Labor Market Search and Matching (2003) Downloads
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:isu:genstf:200311240800001189

Access Statistics for this paper

More papers in ISU General Staff Papers from Iowa State University, Department of Economics Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070. Contact information at EDIRC.
Bibliographic data for series maintained by Curtis Balmer ().

 
Page updated 2022-05-16
Handle: RePEc:isu:genstf:200311240800001189