scholarly journals THE BUSINESS CYCLE WITH NOMINAL CONTRACTS AND SEARCH FRICTIONS

2018 ◽  
Vol 22 (2) ◽  
pp. 307-330
Author(s):  
Weh-Sol Moon
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Extended Model ◽  
Search Frictions ◽  
Macroeconomic Models ◽  
Wage Rates ◽  
Excess Volatility ◽  
The Business Cycle ◽  
Wage Structures ◽  
Efficient Bargaining

Macroeconomic models of the economy with rigid wage structures tend to predict unrealistically volatile labor hours and countercyclical productivity. This study extends the Cho–Cooley model by incorporating labor market frictions and efficient bargaining as an alternative contracting scheme in which contracts are forward-looking and specify labor hours and wage rates. By accounting for search frictions and realistic contractual schemes, the extended model overcomes two counterfactual predictions: (1) excess volatility of employment and output and (2) countercyclical productivity. However, the extended model fails to produce the Beveridge curve.

scholarly journals Autonomes Fahren statt Stop and Go: Vorschläge zur effektiven Gestaltung der deutschen Kurzarbeit

2019 ◽  
Vol 68 (3) ◽  
pp. 252-260
Author(s):  
Almut Balleer ◽  
Britta Gehrke ◽  
Brigitte Hochmuth ◽  
Christian Merkl
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Great Recession ◽  
Timely Manner ◽  
Rule Based ◽  
The Great Recession ◽  
Stop And Go ◽  
Time Work ◽  
The Business Cycle ◽  
Short Time

Abstract This article argues that short-time work stabilized employment in Germany substantially during the Great Recession in 2008/09. The labor market instrument acted in timely manner, as it was used in a rule-based fashion. In addition, discretionary extensions were effective due to their interaction with the business cycle. To ensure that short-time work will be effective in the future, this article proposes an automatic facilitation of the access to short-time work in severe recessions. This reduces the likelihood of a too extensive use at the wrong point in time as well as structural instead of cyclical interventions.

scholarly journals Asset Returns, the Business Cycle and the Labor Market

2013 ◽  
Vol 14 (3) ◽  
pp. 372-397 ◽  
Author(s):  
Burkhard Heer ◽  
Alfred Maußner
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Equity Premium ◽  
Working Hours ◽  
New Keynesian ◽  
Monetary Shocks ◽  
Productivity Shocks ◽  
New Keynesian Models ◽  
The Business Cycle ◽  
Sticky Wages

Abstract We review the labor market implications of recent real-business cycle and New Keynesian models that successfully replicate the empirical equity premium. We document the fact that all models reviewed in this article that do not feature either sticky wages or immobile labor between two production sectors as in Boldrin et al. (2001) imply a negative correlation of working hours and output that is not observed empirically. Within the class of Neo-Keynesian models, sticky prices alone are demonstrated to be less successful than rigid nominal wages with respect to the modeling of the labor market stylized facts. In addition, monetary shocks in these models are required to be much more volatile than productivity shocks to match statistics from both the asset and labor market.

Business Cycles and Apprenticeships

2021 ◽  
Author(s):  
Samuel Muehlemann ◽  
Stefan Wolter
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Empirical Studies ◽  
Cost Effective ◽  
Skilled Labor ◽  
Market Failures ◽  
Task Forces ◽  
Apprenticeship Training ◽  
The Business Cycle ◽  
Over Time

The economic reasons why firms engage in apprenticeship training are twofold. First, apprenticeship training is a potentially cost-effective strategy for filling a firm’s future vacancies, particularly if skilled labor on the external labor market is scarce. Second, apprentices can be cost-effective substitutes for other types of labor in the current production process. As current and expected business and labor market conditions determine a firm’s expected work volume and thus its future demand for skilled labor, they are potentially important drivers of a firm’s training decisions. Empirical studies have found that the business cycle affects apprenticeship markets. However, while the economic magnitude of these effects is moderate on average, there is substantial heterogeneity across countries, even among those that at first sight seem very similar in terms of their apprenticeship systems. Moreover, identification of business cycle effects is a difficult task. First, statistics on apprenticeship markets are often less developed than labor market statistics, making empirical analyses of demand and supply impossible in many cases. In particular, data about unfilled apprenticeship vacancies and unsuccessful applicants are paramount for assessing potential market failures and analyzing the extent to which business cycle fluctuations may amplify imbalances in apprenticeship markets. Second, the intensity of business cycle effects on apprenticeship markets is not completely exogenous, as governments typically undertake a variety of measures, which differ across countries and may change over time, to reduce the adverse effects of economic downturns on apprenticeship markets. During the economic crisis related to the COVID-19 global pandemic, many countries took unprecedented actions to support their economies in general and reacted swiftly to introduce measures such as the provision of financial subsidies for training firms or the establishment of apprenticeship task forces. As statistics on apprenticeship markets improve over time, such heterogeneity in policy measures should be exploited to improve our understanding of the business cycle and its relationship with apprenticeships.

scholarly journals Uncertainty and Contradiction: An Essay on the Business Cycle

2015 ◽  
Vol 49 (2) ◽  
pp. 247-264 ◽  
Author(s):  
Michalis Nikiforos
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
The Other ◽  
Financial Instability ◽  
Wage Share ◽  
Hyman Minsky ◽  
Short Run ◽  
Low Levels ◽  
The Business Cycle ◽  
The One

The paper develops a model of economic fluctuations in the medium run and their relation with the short-run macroeconomic equilibrium. The business cycle is the result of two separate forces. On the one hand, there is Harrodian instability. On the other hand, this instability is contained by the inherent contradictions of capitalism. I focus on two of these contradictions: the profit-squeeze that results from the tightening of the labor market as employment and utilization increase, and the financial instability hypothesis as formulated by Hyman Minsky. With the inclusion of overhead labor, the model can explain the U-shaped behavior of the wage share along the business cycle (wage share decreases for low levels of utilization and increases for higher levels) that prevailed in most of the post-WWII period, as well as the decrease in the wage share as utilization increases that has been observed in the most recent cycles.

scholarly journals Labor Market Indicator for Colombia

2021 ◽  
pp. 1-32
Author(s):  
Deicy J. Cristiano-Botia ◽  
Manuel Dario Hernandez-Bejarano ◽  
Mario A. Ramos-Veloza
Keyword(s):  
Time Series ◽  
Labor Market ◽  
Business Cycle ◽  
Unemployment Rate ◽  
Economic Activity ◽  
Growth Cycle ◽  
Current State ◽  
The Business Cycle ◽  
Market Indicator

Although the unemployment rate is traditionally used to diagnose the current state of the labor market, this indicator does not reflect the existence of asymmetries, mobility costs, and rigidities which impede labor to freely flow over the business cycle. Thus, to get a better portrait of the momentum, we construct the Labor Market Indicator (LMI) focusing on the cyclical similarities of eighteen time series from the Colombian household, industrial, and opinion surveys between 2001 and 2019. Our indicator summarizes the growth cycle of the labor market and its evolution is closely related to the output and unemployment GAP. This indicator is useful for policy analysis as it is useful to forecast headline inflation, it also complements the diagnosis of the current momentum of the labor market, the general economic activity, and the characterization of economic phases and turning points.

scholarly journals Predicting turning points in the South African economy

2003 ◽  
Vol 6 (2) ◽  
pp. 289-303 ◽  
Author(s):  
Elna Moolman
Keyword(s):  
Business Cycle ◽  
South African ◽  
Turning Points ◽  
Economic Indicator ◽  
Macroeconomic Model ◽  
The South ◽  
Macroeconomic Models ◽  
Market Participants ◽  
The Business Cycle

Despite the existence of macroeconomic models and complex business cycle indicators, it would be beneficial to policymakers and market participants if they could look at one well-chosen indicator in predicting business cycle turning points. If one indicator accurately predicts business cycle turning points, it provides an easy way to confirm the predictions of macroeconomic models, or it can eliminate the need for a macroeconomic model if the interest is in the turning points and not in the levels of the business cycle. The objective of this paper is to investigate whether turning points of the South African business cycle can be predicted with only one economic indicator.

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