Publication

Oct 2009

This working paper finds that the introduction of capital in an endogenous separations New Keynesian matching model generates an important channel for the transmission of aggregate productivity shocks, using capital-labor trade-off. The authors use a more general approach than vintage capital theory, such that workers have unrestricted access to a proportional share of the capital stock. Their model generates higher volatilities of key variables and therefore enhances the performance of the matching model.

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Author Björn van Roye, Dennis Wesselbaum
Series Kiel Institute Working Papers
Issue 1561
Publisher Kiel Institute for the World Economy
Copyright © 2009 Kiel Institute for the World Economy
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