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Following a recession, the aggregate labor market is slack-employment remains below normal and recruiting efforts of employers, as measured by help-wanted advertising and vacancies, are low. A model of matching friction explains the qualitative responses of the labor market to adverse shocks,...
Persistent link: https://www.econbiz.de/10005570963
Strong and widely accepted evidence shows that the natural rate of unemployment varies over time with substantial amplitude. The frictions in the labor market that account for positive normal levels of unemployment are not simple and mechanical. Instead, as a rich modern body of theory...
Persistent link: https://www.econbiz.de/10005572984
The value of a firm's securities measures the value of the firm's productive assets. If the assets include only capital goods and not a permanent monopoly franchise, the value of the securities measures the value of the capital. Finally, if the price of the capital can be measured or inferred,...
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When a job-seeker and an employer meet, find a prospective joint surplus, and bargain over the wage, conditions in the outside labor market, including especially unemployment, may have limited influence. The job-seeker's only credible threat during bargaining is to hold out for a better deal....
Persistent link: https://www.econbiz.de/10005241354
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Entrepreneurship is risky. We study the risk facing a well-documented and important class of entrepreneurs, those backed by venture capital. Using a dynamic program, we calculate the certainty-equivalent of the difference between the cash rewards that entrepreneurs actually received over the...
Persistent link: https://www.econbiz.de/10008542959
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In a market-clearing economy, declines in demand from one sector do not cause large declines in aggregate output because other sectors expand. The key price mediating the response is the interest rate. A decline in the rate stimulates all categories of spending. But in a low-inflation economy,...
Persistent link: https://www.econbiz.de/10008924581