Existing models of equilibrium unemployment with endogenous labor market participation are complex, generate … procyclical unemployment rates and cannot match unemployment variability relative to GDP. We embed endogenous participation in a … variabilities but also generates strongly countercyclical unemployment rates. With some wage rigidity the model also matches …

in explaining the variability of unemployment and vacancies. If we incorporate long-term wage contracts into the model …

function is used to model unemployment. The standard model can generate sufficiently large cyclical fluctuations in … unemployment, or a sufficiently small response of unemployment to labor market policies, but it cannot do both. Variable search and …

We construct and calibrate a general equilibrium business cycle model with unemployment and precautionary saving. We …' income riskier, both by increasing the unconditional probability of unusually long unemployment spells, and by making wages … fiscal policy offsets the cycle, holding unemployment benefits constant but varying the tax rate procyclically to smooth …