Involuntary Unemployment and the Business Cycle
Review of Economic Dynamics,
Can a model with limited labor market insurance explain standard macro and labor market data jointly? We construct a monetary model in which: i) the unemployed are worse off than the employed, i.e. unemployment is involuntary and ii) the labor force participation rate varies with the business cycle. To illustrate key features of our model, we start with the simplest possible framework. We then integrate the model into a medium-sized DSGE model and show that the resulting model does as well as existing models at accounting for the response of standard macroeconomic variables to monetary policy shocks and two technology shocks. In addition, the model does well at accounting for the response of the labor force and unemployment rate to these three shocks.
01.07.2020 • 11/2020
New Horizon 2020 project: The Challenge of the Social Impact of Energy Transitions
Funded by the European Commission’s Framework Programme Horizon 2020, the ENTRANCES project recently closed its kick-off meeting with a high scientific and institutional participation, and taking on the challenge of modeling the social impact of the energy transition.
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