Job uncertainty and deep recessions

• 成果类型: Article
• 署名作者: Ravn, Morten O.; Sterk, Vincent
• 署名单位: University of London; University College London; UK Research & Innovation (UKRI); Economic & Social Research Council (ESRC); Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2017.07.003
• 发表日期: 2017
• 页码: 125-141
• 关键词: Job uncertainty; unemployment; Endogenous countercyclical income risk; amplification

摘要

We study a model where households are subject to uninsurable unemployment risk, price setting is subject to nominal rigidities, and the labor market is characterized by matching frictions and inflexible wages. Higher risk of job loss and worsening job finding prospects during unemployment depress goods demand because of a precautionary savings motive. Lower goods demand reduces job vacancies and the job finding rate producing an amplification mechanism due to endogenous countercyclical income risk. Amplification derives from the combination of incomplete financial markets and frictional goods and labor markets. The model can account for key features of the Great Recession. (C) 2017 The Author(s). Published by Elsevier B.V.