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

Pawel P Doligalski; Pawel Kopiec; Pawel Borys

doi:10.1016/j.econmod.2021.105527

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

School of Economics

Research output: Contribution to journal › Article (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 language	English
Article number	105527
Number of pages	16
Journal	Economic Modelling
Volume	101
Issue number	105527
Early online date	4 May 2021
DOIs	https://doi.org/10.1016/j.econmod.2021.105527
Publication status	E-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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title = "The Quantitative Importance of Technology and Demand Shocks for Unemployment Fluctuations in a Shopping Economy",

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.",

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AU - Doligalski, Pawel P

AU - Kopiec, Pawel

AU - Borys, Pawel

PY - 2021/5/4

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N2 - 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.

AB - 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.

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KW - unemployment

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DO - 10.1016/j.econmod.2021.105527

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

Abstract

Bibliographical note

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Keywords

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