TY  - JOUR
AU  - Rogerson,Richard
AU  - Visschers,Lodewijk P.
AU  - Wright,Randall
TI  - Labor Market Fluctuations in the Small and in the Large
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13872
PY  - 2008
Y2  - March 2008
UR  - http://www.nber.org/papers/w13872
L1  - http://www.nber.org/papers/w13872.pdf
N1  - Author contact info:
Richard Rogerson
Woodrow Wilson School of
  Public and International Affairs
323 Bendheim Hall
Princeton University
Princeton, NJ 08544
Tel: 609-258-4839
Fax: 609-258-5349
E-Mail: rdr@princeton.edu

Ludo Visschers
Department of Economics
Universidad Carlos III, Madrid
Calle Madrid 126, Getafe 28903
Spain
E-Mail: lvissche@eco.uc3m.es

Randall Wright
Department of Finance and Department of Economics
University of Wisconsin - Madison
Grainger Hall
975 University Ave
Madison, WI 53706
E-Mail: rwright@bus.wisc.edu
AB  - Shimer's calibrated version of the Mortensen-Pissarides model generates unemployment fluctuates much smaller than the data. Hagedorn and Manovskii present an alternative calibration that yields fluctuations consistent with the data, but this has been challenged by Costain and Reiter, who say it generates unrealistically big differences in unemployment from the differences in policy we sees across countries. We argue this concern may be unwarranted, because one cannot assume elasticities relevant for small changes work for large changes. Models with fixed factors in market or household production can generate large effects from small changes and reasonable effects from large changes. This is reminiscent of attempts to improve the labor market in the Kydland-Prescott model, especially ones incorporating household production, like Benhabib, Rogerson and Wright.
ER  -