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A New Keynesian analysis of industrial employment fluctuations

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Abstract

This paper describes a model with sticky prices, search frictions and hours-clearing wages that provides firm differentiation across several dimensions: price, output, wage, employment and hours per worker. The connection between pricing and hiring decisions results in firm-level employment fluctuations that depend upon sticky prices, search costs, demand elasticity and labor supply elasticity. The calibrated model is able to match average US industrial employment volatility when assuming a small industrial size, providing one possible answer to Shimer (2005a)´s puzzle.

Suggested Citation

  • Miguel Casares, 2009. "A New Keynesian analysis of industrial employment fluctuations," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 0903, Departamento de Economía - Universidad Pública de Navarra.
    • Handle: RePEc:nav:ecupna:0903
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    More about this item

    Keywords

    search frictions; sticky prices; industrial employment;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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