Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Chicago
Working Paper Series
Establishments dynamics, vacancies and unemployment: a neoclassical synthesis
Marcelo Veracierto
Abstract

This paper develops a Walrasian equilibrium theory of establishment dynamics and matching frictions and uses it to analyze business cycle fluctuations. Two scenarios are considered: one in which the matching process is subject to congestion externalities and another in which it is not. The paper finds that the scenario with congestion externalities replicates U.S. business cycle dynamics much better than the scenario with efficient matching. Reallocation shocks improve the empirical behavior of the model in terms of microeconomic adjustments but have little consequences for aggregate dynamics.


Download Full text
Cite this item
Marcelo Veracierto, Establishments dynamics, vacancies and unemployment: a neoclassical synthesis, Federal Reserve Bank of Chicago, Working Paper Series WP-09-14, 2009.
More from this series
JEL Classification:
Subject headings:
Keywords: Unemployment ; Business cycles
For corrections, contact Bernie Flores ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal