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Federal Reserve Bank of Richmond
Economic Quarterly
Instability and indeterminacy in a simple search and matching model
Michael U. Krause
Thomas A. Lubik
Abstract

We demonstrate the possibility of indeterminacy and nonexistence of equilibrium dynamics in a standard business cycle model with search and matching frictions in the labor market. Our results arise for empirically plausible parameterizations and do not rely on a mechanism such as increasing returns.


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Michael U. Krause & Thomas A. Lubik, "Instability and indeterminacy in a simple search and matching model" , Federal Reserve Bank of Richmond, Economic Quarterly, issue 3Q, pages 259-272, 2010.
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Keywords: Labor market ; Business cycles
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