Instability and Indeterminacy in a Simple Search and Matching Model
36 Pages Posted: 8 Jun 2016
Date Written: 2010
We demonstrate the possibility of indeterminacy and non-existence of equilibrium dynamics in a standard business cycle model with search and matching frictions in the labor market. Our results arise for empirically plausible parametrizations and do not rely upon a mechanism such as increasing returns.
Keywords: search and matching, indeterminacy, match elasticity
JEL Classification: E24, E32, J64
Suggested Citation: Suggested Citation