Equilibrium search and unemployment

Publisher Summary This chapter focuses on equilibrium search and unemployment. It presents a study on wage and employment determination in a single market and discusses the impact of the rest of the economy on this market by certain given parameters. This impact takes three forms. First, product demand functions shift in an exogenously determined, stochastic manner. Second, the outside economy offers alternative employment to workers. Third, new workers arrive from the rest of the economy, augmenting the local work force. The chapter also presents an equilibrium model that provides a complete description of the time paths of all variables involved, both at an aggregate and the individual market level.