Establishment Dynamics, Vacancies, and Unemployment: A Neoclassical Approach

36 Pages Posted: 15 Nov 2016

See all articles by Marcelo Veracierto

Marcelo Veracierto

Federal Reserve Bank of Chicago - Research Department

Date Written: November 2016

Abstract

This article introduces and analyzes a Walrasian model of worker flows, job flows, vacancies, and unemployment. Calibrating the model to U.S. data, the article finds that all variables comove with output quite well but that they fluctuate too little. However, the failure is not as bad as in "Shimer's puzzle." Interestingly, the article also finds that introducing establishment dynamics into the model, while realistic, is irrelevant for understanding unemployment and vacancy fluctuations: The business cycles of the model with establishment dynamics are virtually the same as those of a version with a representative firm.

Suggested Citation

Veracierto, Marcelo, Establishment Dynamics, Vacancies, and Unemployment: A Neoclassical Approach (November 2016). International Economic Review, Vol. 57, Issue 4, pp. 1201-1236, 2016, Available at SSRN: https://ssrn.com/abstract=2869468 or http://dx.doi.org/10.1111/iere.12195

Marcelo Veracierto (Contact Author)

Federal Reserve Bank of Chicago - Research Department ( email )

230 South LaSalle Street
Chicago, IL 60604-1413
United States
(312) 322-6595 (Phone)

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