Endogenous business cycles with frictional labour markets

Nigar Hashimzade, Salvador Ortigueira

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

We present a neoclassical model of capital accumulation with frictional labour markets. Under standard parameter values the equilibrium of the model is indeterminate and consequently displays expectations-driven business cycles - so-called endogenous business cycles. We study the properties of such cycles, and find that the model predicts the high autocorrelation in output growth and the hump-shaped impulse response of output found in US data - important features that existing endogenous real business cycle models fail to explain. The indeterminacy of the equilibrium stems from job search externalities and does not rely on increasing returns to scale as in most models.

Original languageEnglish (US)
JournalEconomic Journal
Volume115
Issue number502
DOIs
StatePublished - Mar 1 2005
Externally publishedYes

Fingerprint

Endogenous business cycles
Labour market
Job search
Autocorrelation
Increasing returns to scale
Indeterminacy
Business cycles
Real business cycle models
Externalities
Neoclassical model
Impulse response
Capital accumulation
Output growth

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Endogenous business cycles with frictional labour markets. / Hashimzade, Nigar; Ortigueira, Salvador.

In: Economic Journal, Vol. 115, No. 502, 01.03.2005.

Research output: Contribution to journalArticle

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