Search Unemployment in a Dynamic New Keynesian Model of the Business Cycle

Arbeitspapier

The monetary transmission mechanism plays an important role in studying the effects of monetary policy on the real side of the economy. At least since Chari et al. (2000) it is generally accepted that new keynesian models of the business cycle display a persistence problem. In this paper, we follow the approach of Walsh (2002) and include search unemployment in a dynamic new keynesian model of the business cycle in order to study the effects of a monetary shock. After deriving the equilibrium solution of the model, we study the behavior of the impulse response functions due to a monetary shock. To complete our analysis we confront the results of our simulation to time series data for the U.S., U.K. and Germany. Our main result is that the introduction of search unemployment does improve the capability of the model to reproduce some stylized facts of the monetary transmission mechanism, however to a less extent than expected.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Darmstadt Discussion Papers in Economics ; No. 119

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Business Fluctuations; Cycles ; Particular Labor Markets: General ; Labor Turnover; Vacancies; Layoffs
• Subject: Search Unemployment ; Monetary Shocks ; Business Cycles ; Geldpolitische Transmission ; Friktionelle Arbeitslosigkeit ; Konjunkturtheorie ; Neukeynesianische Makroökonomik ; Theorie ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gerke, Rafael ; Rubart, Jens
• Event: Veröffentlichung
• (who): Technische Universität Darmstadt, Department of Law and Economics
• (where): Darmstadt
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/84843
• Last update: 10.03.2025, 11:44 AM CET