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Medientyp:
E-Artikel
Titel:
FINANCIAL RISK AND UNEMPLOYMENT
Beteiligte:
Eckstein, Zvi;
Setty, Ofer;
Weiss, David
Erschienen:
Wiley, 2019
Erschienen in:International Economic Review
Sprache:
Englisch
DOI:
10.1111/iere.12360
ISSN:
0020-6598;
1468-2354
Entstehung:
Anmerkungen:
Beschreibung:
<jats:title>Abstract</jats:title><jats:p>There is a strong correlation between corporate interest rates, their spreads relative to Treasuries, and the unemployment rate. We model how corporate interest rates affect equilibrium unemployment and vacancies, in a Diamond–Mortesen–Pissarides search and matching model. Our simple model permits the exploration of U.S. business cycle statistics through the lens of financial shocks. We calibrate the model using U.S. data without targeting business cycle statistics. Volatility in the corporate interest rate can explain a quantitatively meaningful portion of the labor market. Data on corporate firms support the hypothesis that firms facing more volatile financial conditions have more volatile employment.</jats:p>