Unemployment and Business Cycles

By Larry Christiano, Martin Eichenbaum, Mathias Trabandt. 2013

325 citations recorded by the source corpus.

We develop and estimate a general equilibrium model that accounts for key business cycle properties of macroeconomic aggregates, including labor market variables. In sharp contrast to leading New Keynesian models, wages are not subject to exogenous nominal rigidities. Instead we derive wage inertia from our specification of how firms and workers interact when negotiating wages. Our model outperforms the standard Diamond-Mortensen-Pissarides model both statistically and in terms of the plausibility of the estimated structural parameter values. Our model also outperforms an estimated sticky wage model.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/dbcc37842fe8f74eaaaa4eee3081f63206c28b70

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In Economics and Econometrics

Citations in the corpus

Fiscal policy during a pandemic (2020, unknown): “from more complicated models that make labor market frictions explicit (Christiano et al., 2016; McKay and Reis, 2020).”
Should We Reject the Natural Rate Hypothesis (2018, background): “…for example the behavior of actual and potential output, as well as the behavior of the actual and the natural unemployment rate, in a model by Christiano et al (2016) that allows, in addition to capital accumulation, for matching frictions in the labor market, frictions which prevent…”
The Aggregate Implications of Regional Business Cycles (2019, unknown): “Christiano, Eichenbaum, and Trabandt (2015) estimated a medium-scale New Keynesian model using data from the recent recession.”
Doves for the Rich, Hawks for the Poor? Distributional Consequences of Monetary Policy (2016, unknown): “Relation to the Literature The model economy falls into the New Keynesian class of models of nominal rigidities, which replicate salient features of the business cycle (Smets and Wouters 2007), particularly if labormarket search and matching frictions are accounted for (Christiano et al. 2015).”
Microeconomic Heterogeneity and Macroeconomic Shocks (2018, background): “A common feature of 15Within RANK models, recent progress in this direction has been made by Gertler and Trigari (2009) and Christiano et al. (2016) these models is the existence of search frictions in product markets.”
On DSGE Models (2018, unknown): “For example, Christiano et al. (2011) work with a linearized version of their model while Christiano et al. (2016) work with a nonlinear version of the model.”