Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/51620 
Year of Publication: 
2011
Series/Report no.: 
IZA Discussion Papers No. 5763
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Building a model with three imperfect markets - goods, labor and credit - representing a product's life-cycle, we find that goods market frictions drastically change the qualitative and quantitative dynamics of labor market variables. The calibrated model leads to a significant reduction in the gap with the data, both in terms of persistence and volatility while search models of the labor market fail in one of the two dimensions. Two factors related to goods market frictions generate these results: i) the expected dynamics of consumers' search for goods, itself depending on the income redistributed by firms and the entry of new products; and ii) the expected dynamics of prices, which alter future profit flows.
Subjects: 
search
matching
business cycle
goods market imperfection
JEL: 
J6
E12
E13
E3
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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