Cyclical behavior of a matching model with capital investment

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Abstract

This paper studies the role of capital investment in a search and matching model. I develop an endogenous job separation matching model in which a firm's irreversible capital investment isendogenously determined. The incorporation of capital investment provides an additional channel for firms to respond to productivity shocks, significantly magnifying labor market fluctuations. Thenumerical results demonstrate that the incorporation of irreversible capital investment improves the ability of the standard search and matching model to generate cyclical fluctuations of unemployment and vacancies in response to productivity shocks. Moreover, my model can generate the pro-cyclicality of vacancies, which the standard endogenous separation models often fail to generate.

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Details 詳細情報について

  • CRID
    1572543026890245760
  • NII Article ID
    110008005797
  • NII Book ID
    AA12509645
  • Text Lang
    en
  • Data Source
    • CiNii Articles

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