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Matching efficiency and business cycle fluctuations

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  • Francesco Furlanetto
  • Nicolas Groshenny

Abstract

A large decline in the efficiency of the US 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 macroeconomic implications of matching efficiency shocks. We show that the propagation 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.

Suggested Citation

  • Francesco Furlanetto & Nicolas Groshenny, 2012. "Matching efficiency and business cycle fluctuations," CAMA Working Papers 2012-34, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2012-34
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2021-06/34_furlanetto_groshenny_2012.pdf
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    Citations

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    Cited by:

    1. Alejandro Justiniano, 2012. "Comment on "Structural and Cyclical Forces in the Labor Market during the Great Recession: Cross-Country Evidence"," NBER Chapters, in: NBER International Seminar on Macroeconomics 2012, pages 415-424, National Bureau of Economic Research, Inc.
    2. Rebecca Craigie & David Gillmore & Nicolas Groshenny, 2012. "Matching workers with jobs:how well is the New Zealand labour market doing?," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 75, pages 3-12, December.
    3. Francesco Furlanetto & Nicolas Groshenny, 2016. "Mismatch Shocks and Unemployment During the Great Recession," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(7), pages 1197-1214, November.
    4. Lawrence J. Christiano & Martin S. Eichenbaum & Mathias Trabandt, 2016. "Unemployment and Business Cycles," Econometrica, Econometric Society, vol. 84(4), pages 1523-1569, July.
    5. Pietro Tebaldi & Matthew Jackson, 2014. "A Forest Fire Theory of Recessions and Unemployment," 2014 Meeting Papers 120, Society for Economic Dynamics.
    6. Sedláček, Petr, 2014. "Match efficiency and firms' hiring standards," Journal of Monetary Economics, Elsevier, vol. 62(C), pages 123-133.
    7. Luca Sala & Ulf Söderström & Antonella Trigari, 2013. "Structural and Cyclical Forces in the Labor Market during the Great Recession: Cross-Country Evidence," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 345-404.
    8. repec:spo:wpmain:info:hdl:2441/293qice3lj861rvos9ns14n0h0 is not listed on IDEAS
    9. repec:hal:spmain:info:hdl:2441/293qice3lj861rvos9ns14n0h0 is not listed on IDEAS
    10. Guglielminetti, Elisa & Pouraghdam, Meradj, 2018. "Time-varying job creation and macroeconomic shocks," Labour Economics, Elsevier, vol. 50(C), pages 156-179.
    11. Wesselbaum, Dennis, 2019. "Jobless recoveries: The interaction between financial and search frictions," Journal of Macroeconomics, Elsevier, vol. 61(C), pages 1-1.
    12. Furlanetto, Francesco & Groshenny, Nicolas, 2016. "Reallocation shocks, persistence and nominal rigidities," Economics Letters, Elsevier, vol. 141(C), pages 151-155.
    13. Yuelin Liu, 2014. "Endogenous Labor Force Participation, Involuntary Unemployment and Monetary Policy," Discussion Papers 2014-41, School of Economics, The University of New South Wales.
    14. Mikhail Simutin & JessieJiaxu Wang & Lars Kuehn, 2014. "A Labor Capital Asset Pricing Model," 2014 Meeting Papers 695, Society for Economic Dynamics.
    15. Poilly, Céline & Wesselbaum, Dennis, 2014. "Evaluating labor market reforms: A normative analysis," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 156-170.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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