In particular, 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. The framework is used to examine the welfare costs of economic fluctuations. In the model, agents can choose either to work their current employment opportunity or quit and search for a better job. This paper is available here in PDF format. A prototypical vintage capital model of economic growth is developed, where the decision to replace old technologies with new ones is modeled explicitly.
Technological change is investment specific.
Depreciation in this environment is an economic, not a physical, concept. The vintage capital economy's balanced-growth paths and transitional dynamics are analyzed. The transitional dynamics are markedly different from the standard neoclassical growth model. An overlapping generations model of marriage and divorce is constructed to analyze family structure and intergenerational mobility. Agents differ by sex, marital status, and human capital.