Norges Bank

Working Paper

Matching efficiency and business cycle fluctuations

Author:
Francesco Furlanetto and Nicolas Groshenny
Series:
Working Paper
Number:
7/2012

Abstract

A large decline in the efficiency of the U.S. labor market in matching unemployed workers and vacant jobs has been documented during the Great Recession. We use a simple New Keynesian model with search and matching frictions in the labor market to study the propagation of matching e¢ ciency shocks. We show that the transmission of these disturbances and their importance for business cycle fluctuations depend crucially on the form of hiring costs and on the presence of nominal rigidities.

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ISSN 1502-8190 (online)

Published 18 May 2012 11:00
Published 18 May 2012 11:00