The Planning Solution in a Textbook Model of Search and Matching: Discrete and Continuous Time


This note uses recursive methods to provide a simple characterization of the planner’s solution of the continuous time and discrete time version of the simplest Pissarides (2000) model. I show that the solutions are virtually identical, characterized by a constant vacancy-unemployment ratio θ∗. In the continuous time model, employment adjusts monotonically… (More)