TY  - JOUR
AU  - Gali,Jordi
TI  - Non-Walrasian Unemployment Fluctuations
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5337
PY  - 1995
Y2  - November 1995
UR  - http://www.nber.org/papers/w5337
L1  - http://www.nber.org/papers/w5337.pdf
N1  - Author contact info:
Jordi Gali
Centre de Recerca en Economia Internacional (CREI)
Ramon Trias Fargas 25
08005 Barcelona
SPAIN
Tel: 011-34-93-5422754
Fax: 011-34-93-5421860
E-Mail: jgali@crei.cat
AB  - We modify the standard real business cycle model by assuming that wages are set by a monopoly union at the firm level.  In the context of such a model, we introduce a measure of unemployment and analyze its equilibrium behavior.  We show that a calibrated version of the model is capable of generating both a procyclical labor supply and a countercyclical unemployment rate, in a way qualitatively consistent with the evidence.  The model stresses the role of countercyclical markups in the goods market as a key mechanism underlying the countercyclical behavior of unemployment.
ER  -