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| Author: | Arnold, L. G. |
| Title: | Financial market imperfections, labour market imperfections and business cycles |
| Journal: | Scandinavian Journal of Economics
2002 : MAR, VOL. 104:1, p. 105-124 |
| Index terms: | Unemployment Business cycles Labour markets Financial control |
| Language: | eng |
| Abstract: | A Greenwald-Stiglitz style rational expectations business cycle model is introduced in which uncorrelated productivity shocks or monetary shocks generate autocorrelated employment fluctuations due to financial constraints. The propagation mechanism is carefully modelled: because of capital market imperfections, firms' labour demand changes in response to changes in their balance-sheet position; because of labour market imperfections, employment and unemployment fluctuate in response to shifts in labour demand. |
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