Job Destruction and Propagation of Shocks
We develop and quantitatively implement a dynamic general equilibrium model with labor" market matching and endogenous job destruction. The model produces a close match with data on" job creation and destruction. Cyclical fluctuations in the job destruction rate serve to magnify the" effects of productivity shock on output, as well as making the effects much more persistent. " Interactions between household savings decisions and separation decisions in employment" relationships play a key role in propagating shocks.
Wouter J. den Haan & Garey Ramey & Joel Watson, 2000. "Job Destruction and Propagation of Shocks," American Economic Review, American Economic Association, vol. 90(3), pages 482-498, June. citation courtesy of