Transitional dynamics of the search model with endogenous growth

✍ Scribed by Fabien Postel-Vinay

• Publisher: Elsevier Science
• Year: 1998
• Tongue: English
• Weight: 261 KB
• Volume: 22
• Category: Article
• ISSN: 0165-1889
• DOI: 10.1016/s0165-1889(97)00095-x

✦ Synopsis

This paper studies the steady state and dynamics of the standard matching model, allowing for endogenous capital accumulation and endogenous growth. The existence and uniqueness of a balanced growth path is shown, along which the relationship between unemployment and growth may not be considered clear-cut. The model also exhibits interesting dynamic features, and suggests some kind of asymmetry in the adjustment of employment over the cycle. A collection of numerical experiments finally shows that a linear approximation of the model may yield a dynamic scheme that is reasonably close to the one obtained with the nonlinear model, and that this feature is very robust to changes in particular assumptions made on the specification of various functions.