The Balance Condition in Search-and-Matching Models

28 Pages Posted: 26 Nov 2018 Last revised: 16 Aug 2019

See all articles by Stephan Lauermann

Stephan Lauermann

University of Bonn

Georg Nöldeke

University of Basel; University of Basel

Thomas Tröger

University of Bonn - Institute of Economic Theory III - Department of Economics

Date Written: August 15, 2019

Abstract

Most of the literature that studies frictional search-and-matching models with heterogeneous agents and random search investigates steady-state equilibria. Steady-state equilibrium requires, in particular, that the flows of agents into and out of the population of unmatched agents balance. We investigate the structure of this balance condition, taking agents' matching behavior as given. Building on the "fundamental matching lemma" for quadratic search technologies in Shimer and Smith (2000), we establish existence, uniqueness, and comparative-static properties of the solution to the balance condition for any search technology satisfying minimal regularity conditions. Implications for the existence and structure of steady-state equilibria are noted.

Keywords: Search, Matching, Steady States

JEL Classification: C78, D83

Suggested Citation

Lauermann, Stephan and Nöldeke, Georg and Tröger, Thomas, The Balance Condition in Search-and-Matching Models (August 15, 2019). Available at SSRN: https://ssrn.com/abstract=3285141 or http://dx.doi.org/10.2139/ssrn.3285141

Stephan Lauermann

University of Bonn ( email )

Adenauerallee
24-42
Bonn, 53113
Germany

Georg Nöldeke (Contact Author)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

HOME PAGE: http://sites.google.com/site/georgnoldeke/

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

HOME PAGE: http://sites.google.com/site/georgnoldeke/

Thomas Tröger

University of Bonn - Institute of Economic Theory III - Department of Economics ( email )

Postfach 2220
D-53012 Bonn
Germany

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