To assess the impact of these differences, we contrast selected properties of the competing technology shock measures. We argue that the properties of technology shocks for the manufacturing sector are quite different than those used in the RBC literature. We also find that correcting for capital utilization has important implications for the properties of the Solow residual. A search-theoretic general equilibrium model of frictional unemployment is constructed and shown to be consistent with the key regularities of unemployment over the business cycle. In the model the return to a job moves stochastically.
Agents can choose either to quit and search for a better job, or continue working.
Search generates job offers that agents can accept or reject.