The Quantitative Importance of Technology and Demand Shocks for Unemployment Fluctuations in a Shopping Economy

Pawel P Doligalski*, Pawel Kopiec, Pawel Borys

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

Abstract

We construct and estimate a business cycle model with search and matching frictions in the labor market and in the product market. We show that the dynamic structure of the model and the endogenous job separation rate are important to accurately represent the empirical responses to the technology and the demand shocks. Our main finding is that the demand shock explains at least 58% of the unemployment fluctuations in the US, while the technology shock accounts for the residual.
Original languageEnglish
Article number105527
Number of pages16
JournalEconomic Modelling
Volume101
Issue number105527
Early online date4 May 2021
DOIs
Publication statusE-pub ahead of print - 4 May 2021

Bibliographical note

Funding Information:
This work was supported by the Polish National Science Center ( Narodowe Centrum Nauki ) grant no. 2014/15/N/HS4/01342 .

Publisher Copyright:
© 2021

Structured keywords

  • ECON Macroeconomics

Keywords

  • technology shocks
  • demand shocks
  • unemployment
  • business cycles

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