Increasing returns in matching and labour market dynamics: Comments on indeterminacy and search theory

Marco Guerrazzi

MPRA Paper from University Library of Munich, Germany

Abstract: In this note I discuss the condition for indeterminacy in the context of search models with increasing returns in the matching technology. Building on the theoretical framework set forth by Giammarioli (2003), I argue that increasing returns with respect to vacancies at the aggregate level is only a necessary requirement for indeterminate equilibrium paths. Specifically, I show that sunspot equilibria can actually be obtained by imposing an additional condition between the private and the social elasticity of the matching function with respect to unemployment.

Keywords: Search theory; Matching function; Indeterminacy; General equilibrium. (search for similar items in EconPapers)
JEL-codes: E10 E24 J64 (search for similar items in EconPapers)
Date: 2015-02-06
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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Related works:
Journal Article: Increasing Returns in Matching and Labour Market Dynamics: Comments on Indeterminacy and Search Theory (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:61947

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