This paper argues that a broad class of search models cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies in response to shocks of a plausible magnitude. In the U.S., the vacancy-unemployment ratio is 20 times as volatile as average labor

are better o ¤ if they …nd a job than if they do not (i.e., unemployment is ‘involuntary’). We integrate our model of involuntary unemployment into the simple New Keynesian framework with no capital and use the resulting model to discuss the concept of the ‘non-accelerating in‡ation rate of unemployment’. We

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the framework of Krusell, Ohanian, Ríos-Rull, and Violante (2000)- a production function with capital-skill complementarity and two skill-groups- into a business-cycle search and matching model. We calibrate the model extending the approach in Hagedorn and Manovskii (2006) and find that the model accounts well

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This paper considers the interaction of two parties with different objectives concerning inflation and unemployment and rational and forward-looking wage-setters. If discretionary policies are followed, an economic cycle related to the political cycle results in equilibrium. This cycle

This paper theoretically and empirically documents a puzzle that arises when an RBC economy with a job matching function is used to model unemployment. The standard model can generate sufficiently large cyclical fluctuations in unemployment, or a sufficiently small response of unemployment

It is well known that real business cycle small open economy models rely on Greenwood, Hercowitz and Huffman (1988) preferences to match the countercyclical trade balance observed in open economies, as well as other second moments. In contrast, standard preferences a la King, Plosser and Rebelo

This paper discusses the short-mn tradeoffbetween inflation and unemployment. Although this tradeoff remains a necessary building block of business cycle theory, economists have yet to provide a completely satisfactory explanation for it. According to the consensus view among central bankers

A search-theoretic model of equilibrium unemployment is constructed and shown to be consistent with the key regularities of the labor market and business cycle.