Dynamics of the Planning Solution in the Textbook Model of Labor Market Search and Matching | Zendy

Helle Bunzel | Zendy; Joydeep Bhattacharya | Zendy

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Dynamics of the Planning Solution in the Textbook Model of Labor Market Search and Matching

Author(s) -

Helle Bunzel,

Joydeep Bhattacharya

Publication year - 2003

Publication title -

ssrn electronic journal

Language(s) - English

Resource type - Journals

ISSN - 1556-5068

DOI - 10.2139/ssrn.383540

Subject(s) - matching (statistics) , economics , computer science , mathematical economics , management science , operations research , mathematics , statistics

This paper takes a discrete-time adaptation of the continuous-time matching economy of Pissarides (1990, 2001) discussed in Ljungqvist and Sargent (2000) and computes the solution to the dynamic planning problem. The solution is shown to be completely characterized by a first-order, non-linear map which admits a unique stationary solution that is dynamically unapproachable from an arbitrary set of initial conditions. Oscillatory solutions are possible but there is no possibility of periodic solutions.

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