Matching Efficiency and Business Cycle Fluctuations

36 Pages Posted: 2 May 2013

See all articles by Francesco Furlanetto

Francesco Furlanetto

Norges Bank

Nicolas Groshenny

Reserve Bank of New Zealand; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

Date Written: April 30, 2012

Abstract

A large decline in the efficiency of the U.S. labor market in matching unemployed workers and vacant jobs has been documented during the Great Recession. We use a simple New Keynesian model with search and matching frictions in the labor market to study the propagation of matching efficiency shocks. We show that the transmission of these disturbances and their importance for business cycle fluctuations depend crucially on the form of hiring costs and on the presence of nominal rigidities.

Suggested Citation

Furlanetto, Francesco and Groshenny, Nicolas, Matching Efficiency and Business Cycle Fluctuations (April 30, 2012). Norges Bank Working Paper 2012|07. Available at SSRN: https://ssrn.com/abstract=2258452 or http://dx.doi.org/10.2139/ssrn.2258452

Francesco Furlanetto (Contact Author)

Norges Bank ( email )

P.O. Box 1179
Oslo, N-0107
Norway

Nicolas Groshenny

Reserve Bank of New Zealand ( email )

6011

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

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