Global Dynamics in a Search and Matching Model of the Labor Market

39 Pages Posted: 23 Oct 2017 Last revised: 9 Nov 2017

See all articles by Nika Lazaryan

Nika Lazaryan

Federal Reserve Banks - Federal Reserve Bank of Richmond

Thomas A. Lubik

Johns Hopkins University - Department of Economics

Date Written: 2017-10-20

Abstract

We study global and local dynamics of a simple search and matching model of the labor market. We show that the model can be locally indeterminate or have no equilibrium at all, but only for parameterizations that are empirically implausible. In contrast to the local results, we show that the model exhibits chaotic and periodic dynamics for reasonable parameter values both in backward and forward time. In contrast to earlier work, we establish these results analytically without placing numerical restrictions on the parameters.

Keywords: Indeterminacy, Bifurcation, Chaos, Backward Map, Forward Map

JEL Classification: C62, C65, E24, J64

Suggested Citation

Lazaryan, Nika and Lubik, Thomas A., Global Dynamics in a Search and Matching Model of the Labor Market (2017-10-20). FRB Richmond Working Paper No. 17-12. Available at SSRN: https://ssrn.com/abstract=3056594

Nika Lazaryan (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond

P.O. Box 27622
Richmond, VA 23261
United States

Thomas A. Lubik

Johns Hopkins University - Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States

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