The Macroeconomics of Labor and Credit Market Imperfections | Zendy

Étienne Wasmer | Zendy; Philippe Weil | Zendy

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The Macroeconomics of Labor and Credit Market Imperfections

Author(s) -

Étienne Wasmer,

Philippe Weil

Publication year - 2004

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/0002828042002525

Subject(s) - economics , general equilibrium theory , bond market , volatility (finance) , financial accelerator , monetary economics , financial market , credit crunch , macroeconomics , monetary policy , dynamic stochastic general equilibrium , econometrics , finance

Credit market imperfections influence the labor market and aggregate economic activity. In turn, macroeconomic factors have an impact on the credit sector. To assess these effects in a tractable general-equilibrium framework, we introduce endogenous search frictions, in the spirit of Peter Diamond (1990), in both credit and labor markets. We demonstrate that credit frictions amplify macroeconomic volatility through a financial accelerator. The magnitude of this general-equilibrium accelerator is proportional to the credit gap, defined as the deviation of actual output from its perfect credit market level. We explore various extensions, notably endogenous wages.SCOPUS: re.jinfo:eu-repo/semantics/publishe

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