Endogenous Disasters

• 成果类型: Article
• 署名作者: Petrosky-Nadeau, Nicolas; Zhang, Lu; Kuehn, Lars-Alexander
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - San Francisco; University System of Ohio; Ohio State University; National Bureau of Economic Research; Carnegie Mellon University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20130025
• 发表日期: 2018
• 页码: 2212-2245
• 关键词: US BUSINESS CYCLES; great-depression; cyclical behavior; labor-market; equilibrium unemployment; household production; Wage stickiness; asset returns; RISK; aggregate

摘要

Market economies are intrinsically unstable. The standard search model of equilibrium unemployment, once solved accurately with a globally nonlinear algorithm, gives rise endogenously to rare disasters. Intuitively, in the presence of cumulatively large negative shocks, inertial wages remain relatively high., and reduce profits. The marginal costs of hiring run into downward rigidity, which stems from the trading externality of the matching process, and fail to decline relative to profits. Inertial wages and rigid hiring costs combine to stifle job creation flows, depressing the economy into disasters. The disaster dynamics ore robust to extensions to home production, capital accumulation, and recursive utility.