We identify the main shock driving fluctuations in long‐horizon productivity expectations, consistent with theories of … TFP news. The identified shock induces strong comovement patterns in output, consumption, investment, employment, and … news shock. The model also matches the empirical patterns of vacancies, labor force participation, hours, and job …

The search and matching model of the labor market has become the workhorse for analyzing unemployment dynamics and the … business cycle transmission mechanism. However, many quantitative studies of the search and matching framework argue that it is … and matching framework using Bayesian methods. I show that the model has extremely weak internal propagation and that …