Instability and Indeterminacy in a Simple Search and Matching Model
14 Pages Posted: 16 Dec 2012
Date Written: 2010
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.
Suggested Citation: Suggested Citation