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Financial Shocks, Job Destruction Shocks, And Labor Market Fluctuations

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  • Zanetti, Francesco

Abstract

This paper investigates the effect of financial shocks using a general equilibrium model that links the firm's flows of financing with labor market variables. The results show that financial shocks have sizeable effects on debt, dividend payout, and wages. Shocks to the job destruction rate are important in explaining fluctuations in unemployment. The analysis also investigates the underlying driving forces of some key comovements in the data and finds shocks to the job destructions rate important.

Suggested Citation

  • Zanetti, Francesco, 2019. "Financial Shocks, Job Destruction Shocks, And Labor Market Fluctuations," Macroeconomic Dynamics, Cambridge University Press, vol. 23(3), pages 1137-1165, April.
    • Handle: RePEc:cup:macdyn:v:23:y:2019:i:03:p:1137-1165_00
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    Cited by:

    1. Ponomarenko, Alexey & Tatarintsev, Stas, 2023. "Incorporating financial development indicators into early warning systems," The Journal of Economic Asymmetries, Elsevier, vol. 27(C).
    2. Matsue, Toyoki, 2022. "Role of worker flows in the relationship between job offers and employment," MPRA Paper 115316, University Library of Munich, Germany.
    3. Conti, Antonio M., 2021. "Resurrecting the Phillips Curve in Low-Inflation Times," Economic Modelling, Elsevier, vol. 96(C), pages 172-195.
    4. Finkelstein Shapiro, Alan & Olivero, Maria Pia, 2020. "Lending relationships and labor market dynamics," European Economic Review, Elsevier, vol. 127(C).
    5. Wesselbaum, Dennis, 2019. "Jobless recoveries: The interaction between financial and search frictions," Journal of Macroeconomics, Elsevier, vol. 61(C), pages 1-1.
    6. Casares, Miguel & Khan, Hashmat & Poutineau, Jean-Christophe, 2020. "The extensive margin and US aggregate fluctuations: A quantitative assessment," Journal of Economic Dynamics and Control, Elsevier, vol. 120(C).
    7. Foroni, Claudia & Furlanetto, Francesco, 2022. "Explaining Deviations from Okun's Law," CEPR Discussion Papers 17369, C.E.P.R. Discussion Papers.
    8. Carnicelli, Lauro, 2018. "Financial shocks and endogenous labor market participation," MPRA Paper 90254, University Library of Munich, Germany.
    9. Francesco Corsello & Valerio Nispi Landi, 2020. "Labor Market and Financial Shocks: A Time‐Varying Analysis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(4), pages 777-801, June.
    10. Antonio M. Conti & Andrea Nobili, 2019. "Wages and prices in the euro area: exploring the nexus," Questioni di Economia e Finanza (Occasional Papers) 518, Bank of Italy, Economic Research and International Relations Area.

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