The Business Cycle Mechanics of Search and Matching Models

27 Pages Posted: 28 Aug 2020

See all articles by Joshua Bernstein

Joshua Bernstein

Indiana University Bloomington - Department of Economics

Alexander W. Richter

Federal Reserve Bank of Dallas

Nathaniel A. Throckmorton

William & Mary

Date Written: August, 2020

Abstract

This paper estimates a real business cycle model with unemployment driven by shocks to labor productivity and the job separation rate. We make two contributions. First, we develop a new identification scheme based on the matching elasticity that allows the model to perfectly match a range of labor market moments, including the volatilities of unemployment and vacancies. Second, we use our model to revisit the importance of shocks to the job separation rate and highlight how their correlation with labor productivity affects their transmission mechanism.

JEL Classification: C13, E24, E32, E37, J63

Suggested Citation

Bernstein, Joshua and Richter, Alexander W. and Throckmorton, Nathaniel A., The Business Cycle Mechanics of Search and Matching Models (August, 2020). FRB of Dallas Working Paper No. 2026, Available at SSRN: https://ssrn.com/abstract=3682352 or http://dx.doi.org/10.24149/wp2026

Joshua Bernstein (Contact Author)

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States

Alexander W. Richter

Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States
214-922-5360 (Phone)

HOME PAGE: http://alexrichterecon.com

Nathaniel A. Throckmorton

William & Mary ( email )

Economics Department
P.O. Box 8795
Williamsburg, VA 23187
United States

HOME PAGE: http://nathrockmorton.people.wm.edu/

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