Unemployment Crises

Nicolas Petrosky-Nadeau and Lu Zhang ()

No 19207, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A search and matching model, when calibrated to the mean and volatility of unemployment in the postwar sample, can potentially explain the large unemployment dynamics in the Great Depression. The limited response of wages to labor market conditions from credible bargaining and the congestion externality from matching frictions cause the unemployment rate to rise sharply in recessions but decline gradually in booms. The frequency, severity, and persistence of unemployment crises in the model are quantitatively consistent with U.S. historical time series.

JEL-codes: E24 E32 G01 G12 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Note: AP CF EFG LS
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Citations: View citations in EconPapers (11)

Published as Nicolas Petrosky-Nadeau & Lu Zhang, 2020. "Unemployment Crises," Journal of Monetary Economics, .

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Working Paper: Unemployment Crises (2013)
Working Paper: Unemployment Crises
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