Endogenous Beveridge cycles and the volatility of unemployment

F.J.T. Sniekers

Research output: Working paperProfessional

Abstract

This paper aims to explain the magnitude and cyclical structure of the fluctuations in unemployment and vacancies. Adding demand externalities to an otherwise standard search and matching model reduces the need for exogenous shocks in explaining unemployment fluctuations. Under plausible parameter values, the equilibrium dynamics include a stable limit cycle that resembles the empirically observed counterclockwise cycles around the Beveridge curve. Quantitatively, these endogenous `Beveridge cycles' can explain half of the volatility and almost all persistence of unemployment without any exogenous forces, avoiding the amplification and propagation problems of the standard model.
Keywords: Labor market search; Endogenous cycles; Unemployment and vacancies volatility.
JEL Classification: E24; E32; J63; J64
Original languageEnglish
Place of PublicationAmsterdam
PublisherUniversity of Amsterdam
Number of pages38
Publication statusPublished - 2013

Publication series

NameCeNDEF Working Paper
No.13-12

Fingerprint

Unemployment
Fluctuations
Vacancy
Endogenous cycles
Exogenous shocks
Dynamic equilibrium
Labor market search
JEL classification
Beveridge curve
Amplification
Limit cycle
Externalities
Key words
Propagation
Search and matching model
Persistence

Cite this

Sniekers, F. J. T. (2013). Endogenous Beveridge cycles and the volatility of unemployment. (CeNDEF Working Paper; No. 13-12). Amsterdam: University of Amsterdam.
Sniekers, F.J.T. / Endogenous Beveridge cycles and the volatility of unemployment. Amsterdam : University of Amsterdam, 2013. (CeNDEF Working Paper; 13-12).
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Sniekers, FJT 2013 'Endogenous Beveridge cycles and the volatility of unemployment' CeNDEF Working Paper, no. 13-12, University of Amsterdam, Amsterdam.

Endogenous Beveridge cycles and the volatility of unemployment. / Sniekers, F.J.T.

Amsterdam : University of Amsterdam, 2013. (CeNDEF Working Paper; No. 13-12).

Research output: Working paperProfessional

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AB - This paper aims to explain the magnitude and cyclical structure of the fluctuations in unemployment and vacancies. Adding demand externalities to an otherwise standard search and matching model reduces the need for exogenous shocks in explaining unemployment fluctuations. Under plausible parameter values, the equilibrium dynamics include a stable limit cycle that resembles the empirically observed counterclockwise cycles around the Beveridge curve. Quantitatively, these endogenous `Beveridge cycles' can explain half of the volatility and almost all persistence of unemployment without any exogenous forces, avoiding the amplification and propagation problems of the standard model. Keywords: Labor market search; Endogenous cycles; Unemployment and vacancies volatility.JEL Classification: E24; E32; J63; J64

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Sniekers FJT. Endogenous Beveridge cycles and the volatility of unemployment. Amsterdam: University of Amsterdam. 2013. (CeNDEF Working Paper; 13-12).