"Gali and Rabanal provide statistical evidence that, in their view, puts into question the real business cycle paradigm in favor of the sticky-price paradigm. I demonstrate that their statistical procedure is easily misled in that they would reach the same conclusions even if their data had been...

This chapter assesses how models with search frictions have shaped our understanding of aggregatelabor market outcomes in two contexts: business cycle fluctuations and long-run (trend) changes. Wefirst consolidate data on aggregate labor market outcomes for a large set of OECD countries. We...