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Federal Reserve Bank of Cleveland
Working Papers (Old Series)
The cyclical behavior of equilibrium unemployment and vacancies across OECD countries
Pedro S. Amaral
Murat Tasci
Abstract

We show that the inability of a standardly-calibrated stochastic labor search-and-matching model to account for the observed volatility of unemployment and vacancies extends beyond U.S. data to a set of OECD countries. We also argue that using cross-country data is helpful in evaluating the relative merits of the alternatives that have appeared in the literature. In illustrating this point, we take the solution proposed in Hagedorn and Manovskii (2008) and show that its ability to match the labor market volatility magnitudes seen in the data depends crucially on how persistent the estimated productivity process is.


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Pedro S. Amaral & Murat Tasci, The cyclical behavior of equilibrium unemployment and vacancies across OECD countries, Federal Reserve Bank of Cleveland, Working Papers (Old Series) 1236, 2012.
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Keywords: Unemployment ; Wages ; Business cycles ; Human capital
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