Mismatch

2007 ◽  
Vol 97 (4) ◽  
pp. 1074-1101 ◽  
Author(s):  
Robert Shimer
Keyword(s):  
Business Cycle ◽  
Labor Markets ◽  
Dynamic Model ◽  
Duration Dependence ◽  
Cycle Frequency ◽  
Separation Rate ◽  
The Business Cycle ◽  
Job Finding

This paper develops a dynamic model of mismatch. Workers and jobs are randomly allocated to labor markets. Each market clears, but some have excess (unemployed) workers and some have excess (vacant) jobs. As workers and jobs switch markets, unemployed workers find vacancies and employed workers become unemployed. The model is quantitatively consistent with the business cycle frequency comovement of unemployment, vacancies, and the job finding rate and explains much of these variables' volatility. It can also address cyclicality in the separation rate into unemployment and duration dependence in the job finding rate. The results are robust to some nonrandom mobility. (JEL E24, J41, J63, J64)

scholarly journals Multiple job holding, local labor markets, and the business cycle

2016 ◽  
Vol 5 (1) ◽  
Author(s):  
Barry T. Hirsch ◽  
Muhammad M. Husain ◽  
John V. Winters
Keyword(s):  
Business Cycle ◽  
Labor Markets ◽  
Local Labor Markets ◽  
The Business Cycle

Fluctuations and Rigidities in Local Labor Markets. Part 1: Theory and Evidence

1983 ◽  
Vol 15 (2) ◽  
pp. 165-185 ◽  
Author(s):  
G L Clark
Keyword(s):  
Spectral Analysis ◽  
Labor Market ◽  
Business Cycle ◽  
Labor Markets ◽  
Local Labor Markets ◽  
Hours Worked ◽  
Long Run ◽  
Short Run ◽  
The Business Cycle ◽  
Us Cities

Cyclical sensitivity in employment, wages, and hours worked are explored with reference to three industries and eleven US cities over the period 1972–1980. Conventional neoclassical discrete-exchange models of the labor market are shown to be inadequate because of marked rigidities in the patterns of short-run adjustment. Money wages are very stable, being dominated by a long-run trend, and firms tend to adjust hours worked and only then employment in the short run. There are, however, significant interregional variations in these patterns within the same industry. Spectral analysis and tests for periodicities in the patterns of residuals derived from trend-line estimates of money wages confirm a supposition that urban Phillips curves do not exist. The evidence supports the implicit notion of contract theory that continuous employer-worker relationships exist over the business cycle. The question of how useful, in general, this theory might be is left open for the present.

Getting Paid to Hedge: Why Don’t Investors Pay a Premium to Hedge Downturns?

2018 ◽  
Vol 54 (3) ◽  
pp. 1157-1192
Author(s):  
Nishad Kapadia ◽  
Barbara Bennett Ostdiek ◽  
James P. Weston ◽  
Morad Zekhnini
Keyword(s):  
Gross Domestic Product ◽  
Business Cycle ◽  
Expected Returns ◽  
Firm Characteristics ◽  
Cycle Frequency ◽  
Gross Domestic Product Growth ◽  
Market Index ◽  
Ex Ante ◽  
Out Of Sample ◽  
The Business Cycle

Stocks that hedge sustained market downturns should have low expected returns, but they do not. We use ex ante firm characteristics and covariances to construct a tradable safe minus risky (SMR) portfolio that hedges market downturns out of sample. Although downturns (peaks to troughs in market index levels at the business-cycle frequency) predict significant declines in gross domestic product growth, SMR has significant positive average returns and 4-factor alphas (both around 0.8% per month). Risk-based models do not explain SMR’s returns, but mispricing does. Risky stocks are overpriced when sentiment is high, resulting in subsequent returns of -0.9% per month.

scholarly journals “Animal spirits” and bank’s lending behaviour, a disequilibrium approach

2019 ◽  
Vol 24 (2) ◽  
Author(s):  
Carl Chiarella ◽  
Corrado Di Guilmi ◽  
Tianhao Zhi
Keyword(s):  
Business Cycle ◽  
Dynamic Model ◽  
Credit Market ◽  
Collective Behaviour ◽  
Supply Side ◽  
Real Economy ◽  
Animal Spirits ◽  
Credit Cycle ◽  
The Business Cycle

AbstractThe paper analyses from a disequilibrium perspective the role of banks’ “animal spirits” and collective behaviour in the creation of credit that, ultimately, determines the credit cycle. In particular, we propose a dynamic model to analyse how the transmission of waves of optimism and pessimism in the supply side of the credit market interacts with the business cycle. We adopt the Weidlich-Haag-Lux approach to model the opinion contagion of bankers. We test different assumptions on banks’ behaviour and find that opinion contagion and herding amongst banks play an important role in propagating the credit cycle and destabilizing the real economy. The boom phases trigger banks’ optimism that collectively lead the banks to lend excessively, thus reinforcing the credit bubble. Eventually the bubbles collapse due to an over-accumulation of debt, leading to a restrictive phase in the credit cycle.

scholarly journals Methodological aspects of journaling a dynamic adjusting entry model

2011 ◽  
Vol 59 (7) ◽  
pp. 187-194 ◽  
Author(s):  
Vlasta Kašparovská ◽  
Jana Gláserová
Keyword(s):  
Financial Crisis ◽  
Business Cycle ◽  
Dynamic Model ◽  
Negative Impact ◽  
Current Accounting ◽  
Accounting Principles ◽  
Entry Model ◽  
The Business Cycle ◽  
And Function ◽  
Methodological Aspects

This paper expands the discussion of the importance and function of adjusting entries for loan receivables. Discussion of the cyclical development of adjusting entries, their negative impact on the business cycle and potential solutions has intensified during the financial crisis. These discussions are still ongoing and continue to be relevant to members of the professional public, banking regulators and representatives of international accounting institutions. The objective of this paper is to evaluate a method of journaling dynamic adjusting entries under current accounting law. It also expresses the authors’ opinions on the potential for consistently implementing basic accounting principles in journaling adjusting entries for loan receivables under a dynamic model.

scholarly journals Do Job-to-Job Transitions Drive Wage Fluctuations Over the Business Cycle?

2017 ◽  
Vol 107 (5) ◽  
pp. 353-357 ◽  
Author(s):  
Fatih Karahan ◽  
Ryan Michaels ◽  
Benjamin Pugsley ◽  
Ayşegül Şahin ◽  
Rachel Schuh
Keyword(s):  
Business Cycle ◽  
Transition Probability ◽  
Explanatory Power ◽  
Wage Growth ◽  
Wage Dynamics ◽  
Job Transitions ◽  
State Variation ◽  
The Business Cycle ◽  
Job Finding ◽  
The Unemployed

We investigate the importance of job-to-job (JJ) transitions for cyclical wage dynamics. By exploiting cross-state variation, we find that wage growth is tightly linked to variation in the JJ transition probability, and conditional on this, the job finding probability of the unemployed has no explanatory power. We investigate the robustness of our results to several caveats and find the result to hold. Finally, we discuss the implications of our findings for competing theories of wage dynamics.

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