Econ Theory https://doi.org/10.1007/s00199-018-1131-y RESEARCH ARTICLE Global dynamics in a search and matching model of the labor market 1 1 Nika Lazaryan · Thomas A. Lubik Received: 6 October 2017 / Accepted: 22 May 2018 © This is a U.S. Government work and not under copyright protection in the US; foreign copyright protection may apply 2018 Abstract We study global and local dynamics of a simple search and matching model of the labor market. We show that the model exhibits chaotic and periodic dynamics for empirically plausible parameter values both in backward and forward time. In contrast to the global results, we show that the model can be locally indeterminate or have no equilibrium at all, but only for parameterizations that are empirically unreasonable. In contrast to earlier work, we establish these results analytically without placing numerical restrictions on the parameters. Keywords Indeterminacy · Bifurcation · Chaos · Backward map · Forward map JEL Classiﬁcation C62 · C65 · E24 · J64 1 Introduction The search and matching model of the labor market has proved to be a convenient framework for studying the joint behavior of unemployment and job vacancies. Much of the qualitative and quantitative analysis in this framework
Economic Theory – Springer Journals
Published: May 29, 2018
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