We develop a finite horizon continuous time market model, where risk averse investors maximize utility from terminal wealth by dynamically investing in a risk-free money market account, a stock, and a defaultable bond, whose prices are determined via equilibrium. We analyze the endogenous interaction arising between the stock and the defaultable bond via the interplay between equilibrium behavi...

This study analyzes real wage cyclicality for male full-time workers within employer-employee matches in Germany over the period 1984–2004. Five different wage measures are compared: the standard hourly wage rate; hourly wage earnings including overtime and bonus pay; the effective wage, which takes into account unpaid overtime; and monthly earnings, with and without additional pay. None of the...

Wages are only mildly cyclical, implying that shocks to labour demand have a larger short-run impact on unemployment rather than wages, at odds with the quantitative predictions of the canonical search and matching model. This paper provides an alternative perspective on the wage flexibility puzzle, explaining why the canonical model can only match the observed cyclicality of wages if the repla...

Abstract We show that the cyclicality of output growth is a sufficient predictor for markups in models micro-found variable through dynamic trade-offs. use data on from U.S. as well survey firms' expectations New Zealand to test predictions these and find evidence favor their mechanisms. Finally, we study implications mechanisms calibrated general equilibrium model. In particular, degree hump-s...

Decomposing the Ins and Outs of Cyclical Unemployment This paper analyzes the contribution of the socioeconomic and demographic composition of the pool of employed and unemployed individuals to the dynamics of the labor market in different phases of the business cycle. Using individual level data from the Current Population Survey (CPS), we decompose differences in employment status transition ...

This paper analyzes the contribution of the socioeconomic and demographic composition of the pool of employed and unemployed individuals to the dynamics of the labor market in diff erent phases of the business cycle. Using individual level data from the Current Population Survey (CPS), we decompose diff erences in employment status transition rates between economic upswings and downturns into c...

Testing cyclicality of fiscal policy is pertinent in any country to observe its type with the business cycle. In oil abundant economy, price and trade openness may also play a role determining cyclicality. This research probes economic growth, openness, on government consumption growth verify Saudi Arabia from 1971 2018. The cointegration test Pesaran (2001) utilized hypothesis augmented critic...