Search Unemployment, the Business Cycle and the Stochastic Growth

摘要

A further development of propagation mechanisms has been one of the central issues in equilibrium business cycle theory. While the authors have well worked-out examples of several types of propagation mechanisms, one mechanism still remains to be studied in detail. A propagation mechanism based on an optimal search problem is this. This paper presents a simple and tractable framework in which the authors can work out the implications of an optimal search problem for fluctuations of the unemployment rate, aggregate output and productivity. A general equilibrium model is developed in order to specify a search environment explicitly. It combines an optimal search problem and a 'signal extraction' problem as basic constructs. First, the authors study an economy in which the only source of impulse is given by an economywide information shock impinged on the observation of real returns. Then, they proceed to integrate growth factors with a search model. The parameters of the model are estimated. The restrictions that the model imposes on the joint aggregate processes are tested with the U.S. data.