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Search and Matching Frictions and Business Cycle Fluctuations in Bulgaria

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  • Aleksandar Vasilev

    (Lincoln International Business School, University of Lincoln, UK)

Abstract

This research investigates the quantitative importance of search and matching frictions in Bulgarian labor market, by augmenting an otherwise standard real business cycle a la Long and Plosser (1983) with a two-sided costly search and fiscal policy. This strong propagation mechanism allows the model to capture the business cycles in Bulgaria better than earlier models. The model performs well with the given data, especially along the labor market dimension, and dominates the market-clearing labor market framework featured in the standard RBC model, e.g. Vasilev (2009), as well as the indivisible labor market extension in Hansen (1985).

Suggested Citation

  • Aleksandar Vasilev, 2020. "Search and Matching Frictions and Business Cycle Fluctuations in Bulgaria," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 19(3), pages 319-340, December.
    • Handle: RePEc:ijb:journl:v:19:y:2020:i:3:p:319-340
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    More about this item

    Keywords

    General Equilibrium; Unemployment and Wages; Business Cycle; Fiscal Policy;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General

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