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Article Dans Une Revue Economics Letters Année : 2022

Uncertainty shocks and unemployment dynamics

Résumé

Recent events suggest that uncertainty changes play a major role in U.S. labor market fluctuations. This study analyzes the impact of uncertainty shocks on unemployment dynamics. We develop a quantitative version of the Diamond–Mortensen–Pissarides (DMP) model, in which uncertainty shocks hit the economy. Given the significant nonlinearities of the DMP model, we show that the introduction of uncertainty shocks allows this textbook model to account for observed characteristics of the U.S. labor market dynamics, with reasonable values for calibrated parameters.

Dates et versions

hal-04204670 , version 1 (12-09-2023)

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Malak Kandoussi, François Langot. Uncertainty shocks and unemployment dynamics. Economics Letters, 2022, 219 (8), pp.110760. ⟨10.1016/j.econlet.2022.110760⟩. ⟨hal-04204670⟩
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