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The E ¤ ect of Labor and Financial Frictions on Aggregate Fluctuations
| Content Provider | Semantic Scholar |
|---|---|
| Author | Mumtaz, Haroon Zanetti, Francesco |
| Copyright Year | 2013 |
| Abstract | This paper embeds labor market search frictions into a New Keynesian model with nancial frictions as in Bernanke, Gertler and Gilchrist (1999). The econometric estimation establishes that labor market frictions substantially improve the empirical t of the model. The e¤ect of the interaction between labor and nancial frictions on aggregate uctuations depends on the nature of the shock. For monetary policy, technology and entrepreneurial wealth shocks, labor market frictions amplify the e¤ect of nancial frictions since robust changes in hiring lead to persistent movements in employment and the return on capital that reinforce the original e¤ect of nancial frictions. For cost-push, labor supply, marginal e¢ ciency of investment and preference shocks, labor market frictions dampen the e¤ect of nancial frictions by reducing the real cost of repaying existing debt that lowers the external nance premium. JEL: E24, E32, E52. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://www.economics.ox.ac.uk/materials/papers/13171/paper690.pdf |
| Language | English |
| Access Restriction | Open |
| Subject Keyword | Aggregate data Aggregate function Byrsonima crassifolia Ectomesenchymal Chondromyxoid Tumor Labor (Childbirth) Marginal model Money Movement Osmotic Shock |
| Content Type | Text |
| Resource Type | Article |
