TY  - RPRT
        AU  - Petrosky-Nadeau, Nicolas
AU  - Wasmer, Etienne
        TI  - Macroeconomic Dynamics in a Model of Goods, Labor and Credit Market Frictions
        PY  - 2011/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5763
        UR  - https://www.iza.org/publications/dp5763
        AB  - Building a model with three imperfect markets – goods, labor and credit – representing a product's life-cycle, we find that goods market frictions drastically change the qualitative and quantitative dynamics of labor market variables. The calibrated model leads to a significant reduction in the gap with the data, both in terms of persistence and volatility while search models of the labor market fail in one of the two dimensions. Two factors related to goods market frictions generate these results: i) the expected dynamics of consumers' search for goods, itself depending on the income redistributed by firms and the entry of new products; and ii) the expected dynamics of prices, which alter future profit flows.
        KW  - business cycle
KW  - matching
KW  - search
KW  - goods market imperfection
        ER  -