Jobless Recoveries: The Interaction between Financial and Search Frictions

Dennis Wesselbaum

No 1603, Working Papers from University of Otago, Department of Economics

Abstract: This paper establishes a link between labor market frictions and financial market frictions. We present empirical evidence about the relation between search and financial frictions. Then, we build a stylized DSGE model that features this channel. Simulation excercises show that the model with this channel generates a strong internal propagation mechanism, replicates stylized labor market effects of the Great Recession, and, most importantly, creates a jobless recovery.

Keywords: DSGE; Jobless Recovery; Labor Market and Financial Frictions (search for similar items in EconPapers)
JEL-codes: C32 E24 E32 J63 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2016-02, Revised 2016-02
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.otago.ac.nz/economics/otago556617.pdf First version, 2016 (application/pdf)

Related works:
Journal Article: Jobless recoveries: The interaction between financial and search frictions (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:1603

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