This paper evaluates complementarities of labor market institutions and the business cycle in the context of a stochastic dynamic general equilibrium model economy. Matching between workers and vacancies with endogenous time spent in search, Nash{bargained wages, payroll taxation, and...

This paper analyzes the role of variable work effort in inducing sunspot equilibria in real business cycle models. Not only is it demonstrated that variable workers' work intensity reduces the degree of increasing returns that is needed to generate indeterminacy but it is also shown that this...

Countercyclical markups are a key transmission mechanism in many endogenous business cycle models. Yet, recent findings suggest that aggregate markups in the US are procyclical. The current model addresses this issue. It extends Gall's (1994) composition of aggregate demand model by endogenous...

We compare and contrast alternative explanations of the Roaring Twenties. Starting with the RBC model as a benchmark, we also examine a model with indeterminacy and self-fulfilling expectations (SFE), and one with credit shocks. Historical and anecdotal evidence provides support for each of...

This paper evaluates complementarities of labour market institutions and the business cycle in the context of a stochastic dynamic general equilibrium model economy. Matching between workers and vacancies with endogenous time spent in search, Nash-bargained wages, payroll taxation, and...