Anticipated Growth and Business Cycles in Matching Models

By W. J. D. Haan, Georg Kaltenbrunner. 2009

179 citations recorded by the source corpus.

In a business cycle model that incorporates a standard matching framework, employment increases in response to news shocks, even though the wealth effect associated with the increase in expected productivity reduces labor force participation. The reason is that the matching friction induces entrepreneurs to increase investment in new projects and vacancies early. If there is underinvestment in new projects in the competitive equilibrium, then the efficiency gains associated with an increase in employment make it possible that consumption, employment, output, as well as the investment in new and existing projects jointly increase long before the actual increase in productivity materializes. If there is no underinvestment, then investment in existing projects decreases, but total investment, consumption, employment, and output still jointly increase.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/d3fd9cc56926f180675951f126798510a72a4c0c

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In Economics and Econometrics

Citations in the corpus

Chronicle of a war foretold : the macroeconomic effects of anticipated defense spending shocks (2014, background): “Several modifications of the standard model have been suggested for propagating TFP news shocks:11 (a) making consumption or leisure an inferior good (see, Eusepi and Preston (2009)); (b) using wealth in the utility function (Karnizova (2012)); (c) allowing for sticky prices and accommodative moneta”
News shocks and business cycles (2011, unknown): “We are grateful to an anonymous referee, Rudi Bachmann, Nick Bloom, Daniel Cooper, Wouter Den Haan, Lutz Kilian, Bob King, Miles Kimball, Bernd Lucke, Matthew Shapiro, and numerous seminar participants for helpful comments and advice.”
News Driven Business Cycles: Insights and Challenges (2014, unknown): “Den Haan, Wouter J., and Matija Lozej.”
Empirical evidence on the aggregate effects of anticipated and unanticipated US tax policy shocks (2012, result): “Secondly, our results may also have some relevance for the recent interest into the “news” view of business cycles, see e.g. Beaudry and Portier (2004, 2006), Cochrane (1994), Danthine, Donaldson and Johnsen (1998), den Haan and Kaltenbrunner (2009), or Jaimovich and Rebelo (2009).”
Fiscal Policy in an Unemployment Crisis (2016, methodology): “To circumvent this problem, I will follow Den Haan et al. (2000) and Gertler and Trigari (2009), and view workers as separate risk-neutral entities which are owned and traded by households like an asset.”