Financial markets and unemployment
By: Tommaso Monacelli, Vincenzo Quadrini, Antonella Trigari
Contributors: Quadrini, Vincenzo; Trigari, Antonella; National Bureau of Economic Research
Series: NBER working paper series -- working paper 17389; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17389.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "We study the importance of financial markets for (un)employment fluctuations in a model with searching and matching frictions where firms issue debt under limited enforcement.  Higher debt allows employers to bargain lower wages which in turn increases the incentive to create jobs.  The transmission mechanism of 'credit shocks' is fundamentally different from the typical credit channel and the model can explain why firms cut hiring after a credit contraction even if they have not shortage of funds for hiring workers.  The theoretical predictions are consistent with the estimation of a structural VAR whose identifying restrictions are derived from the theoretical model"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 11/29/2011.

Includes bibliographical references.

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