NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Equilibrium Unemployment

Joao Gomes, Jeremy Greenwood, Sergio Rebelo

NBER Working Paper No. 5922
Issued in February 1997
NBER Program(s):   EFG

A search-theoretic general equilibrium model of frictional unemployment is shown to be consistent with some of the key regularities of unemployment over the business cycle. In the model the return to a job moves stochastically. Agents can choose either to quit and search for a better job, or continue working. Search generates job offers that agents can accept or reject. Two distinguishing features of current work relative to the existing business cycle literature on labor market fluctuations are: (i) the decision to accept or reject jobs is modeled explicitly, and (ii) there is imperfect insurance against unemployment.

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Document Object Identifier (DOI): 10.3386/w5922

Published: Gomes, Joao, Jeremy Greenwood and Sergio Rebelo. "Equilibrium Unemployment," Journal of Monetary Economics, 2001, v48(1,Aug), 109-152.

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