Mismatch Shocks and Unemployment During the Great Recession

Arbeitspapier

We investigate the macroeconomic consequences of fluctuations in the effectiveness of the labor-market matching process with a focus on the Great Recession. We conduct our analysis in the context of an estimated medium-scale DSGE model with sticky prices and equilibrium search unemployment that features a shock to the matching efficiency (or mismatch shock). We find that this shock is almost irrelevant for unemployment fluctuations in normal times. However, it plays a somewhat larger role during the Great Recession when it contributes to raise the actual unemployment rate by 1.25 percentage points and the natural rate by 2 percentage points. Moreover, it is the only shock that generates a positive conditional correlation between unemployment and vacancies

Object Details

• ISBN: 978-82-7553-769-8
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2013/16

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Model Construction and Estimation ; Model Evaluation, Validation, and Selection
• Subject: search and matching frictions ; unemployment ; natural rates

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Furlanetto, Francesco ; Groshenny, Nicolas
• Event: Veröffentlichung
• (who): Norges Bank
• (where): Oslo
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/210039
• Last update: 10.03.2025, 11:44 AM CET