The Unemployment Volatility and Wage Inertia Puzzles: The Centrality of Vacancy Posting Costs (to Output)

2019 ◽  
Author(s):  
Mehrab Kiarsi
Keyword(s):  
Unemployment Volatility

scholarly journals Endogenous Separations, Wage Rigidities, and Unemployment Volatility

2022 ◽  
Vol 14 (1) ◽  
pp. 332-354
Author(s):  
Mikael Carlsson ◽  
Andreas Westermark
Keyword(s):  
Wage Rigidity ◽  
Empirical Literature ◽  
Search And Matching ◽  
Matching Model ◽  
Sufficient Statistic ◽  
Search And Matching Model ◽  
Unemployment Volatility ◽  
Newly Hired ◽  
New Hires ◽  
Relevant Degree

We show that in microdata, as well as in a search and matching model with flexible wages for new hires, wage rigidities of incumbent workers have substantial effects on separations and unemployment volatility. Allowing for an empirically relevant degree of wage rigidities for incumbent workers drives unemployment volatility as well as the volatility of vacancies and tightness to that in the data. Thus, the degree of wage rigidity for newly hired workers is not a sufficient statistic for determining the effect of wage rigidities on macroeconomic outcomes. This finding affects the interpretation of a large empirical literature on wage rigidities. (JEL E24, J23, J31, J41, J63)

scholarly journals Do Job Destruction Shocks Matter in the Theory of Unemployment

2018 ◽  
Vol 10 (3) ◽  
pp. 118-136 ◽  
Author(s):  
Melvyn G. Coles ◽  
Ali Moghaddasi Kelishomi
Keyword(s):  
Method Of Moments ◽  
Ad Hoc ◽  
Separation Process ◽  
Free Entry ◽  
Job Destruction ◽  
Separation Shock ◽  
Job Separation ◽  
Simulated Method Of Moments ◽  
The Many ◽  
Unemployment Volatility

Because the data show that market tightness is not orthogonal to unemployment, this paper identifies the many empirical difficulties caused by adopting the free entry of vacancies assumption in the Diamond-Mortensen-Pissarides (DMP) framework. Relaxing the free entry assumption and using Simulated Method of Moments (SMM) finds the vacancy creation process is less than infinitely elastic. Because a recession-leading job separation shock then causes vacancies to fall as unemployment increases, the ad hoc restriction to zero job separation shocks (to generate Beveridge curve dynamics) becomes redundant. In contrast to standard arguments, the calibrated model finds the job separation process drives unemployment volatility over the cycle. (JEL E24, E32, J24, J63, J64)

Political economy of central-bank mandates in developing countries

2021 ◽  
pp. 1-20
Author(s):  
Zhandos Ybrayev
Keyword(s):  
Monetary Policy ◽  
Unemployment Rate ◽  
Inflation Targeting ◽  
Developing Economies ◽  
Emerging Market ◽  
Unemployment Rates ◽  
Inflation Volatility ◽  
Unemployment Volatility ◽  
The Impact ◽  
Fiscal And Monetary Policy

In this paper, I explain theoretically the coordination and conflict scheme of fiscal and monetary policy workings, and then empirically assess the effect of both inflation-targeting and non-inflation-only targeting policies on inflation and unemployment rates. I employ a difference-in-difference method to estimate the impact on inflation, the unemployment rate, and their volatilities in both 10 inflation-targeting (single-mandate) and 11 non-inflation-targeting (multiple-mandate) countries specifically from the sample of developing economies over the period from 1998 to 2018. Our key findings show that while the inflation-targeting countries effectively present a reduction in inflation and inflation volatility, the effects on the unemployment rate are negligible, while unemployment volatility is higher in the period 1998–2008. Finally, the paper argues that the unemployment rate should be used as a natural second target in a typical emerging-market economy case.

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