Firm Dynamics With Frictional Product And Labor Markets

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We analyze the joint dynamics of prices, productivity, and employment across firms, building a dynamic equilibrium model of heterogeneous firms who compete for workers and customers in frictional labor and product markets. Using panel data on prices and output for German manufacturing firms, the model is calibrated to evaluate the quantitative contributions of productivity and demand for the labor market. Product market frictions decisively dampen the firms' employment adjustments to productivity shocks. We further analyze the impact of aggregate shocks to the first and second moments of productivity and demand and relate them to business‐cycle features in our data.

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ISO 690KAAS, Leo, Bihemo Francis KIMASA, 2021. Firm Dynamics With Frictional Product And Labor Markets. In: International Economic Review. Wiley-Blackwell. 2021, 62(3), pp. 1281-1317. ISSN 0020-6598. eISSN 1468-2354. Available under: doi: 10.1111/iere.12510
BibTex
@article{Kaas2021-08Dynam-53444,
  year={2021},
  doi={10.1111/iere.12510},
  title={Firm Dynamics With Frictional Product And Labor Markets},
  number={3},
  volume={62},
  issn={0020-6598},
  journal={International Economic Review},
  pages={1281--1317},
  author={Kaas, Leo and Kimasa, Bihemo Francis}
}
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