Uncertainty , Productivity and Unemployment in the Great Recession ∗

@inproceedings{Schaal2011UncertaintyP,
  title={Uncertainty , Productivity and Unemployment in the Great Recession ∗},
  author={Edouard Schaal},
  year={2011}
}
The 2007-2009 recession has witnessed two phenomena that standard search models of the labor market have difficulty reconciling: a large and persistent increase in unemployment and a sharp rise, above pre-recession levels, in labor productivity following a small initial drop. In addition, these observations were accompanied by a significant increase in the dispersion of firm growth rates. In this paper, I introduce idiosyncratic volatility shocks in search-and-matching models to study if they… CONTINUE READING
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