We examine the sources of macroeconomic fluctuations by estimating a variety richly parameterized DSGE models within unified framework that incorporates regime switching both in shock variances and inflation target. propose an efficient methodology for regime-switching models. Our counterfactual exercises show changes target are not main driving force high 1970s. The model best fits U.S. time-series data is one with synchronized shifts across two regimes, fit does rely on strong nominal...

We argue that the threat of automation weakens workers’ bargaining power in wage negotiations, dampening adjustments and amplifying unemployment fluctuations. make this argument based on a business cycle model with labor market search frictions, generalized to incorporate decisions. In model, procyclical threats create endogenous real rigidity amplifies The mechanism is consistent empirical evidence. It also quantitatively important for explaining large volatilities vacancies relative wages,...

The cyclical behavior of real wages has evolved from mildly countercyclical during the interwar period to modestly procyclical in postwar era. This paper presents a general-equilibrium business-cycle model that helps explain evolution. In model, changes wage cyclicality arise interactions between nominal and price rigidities an evolving input-output structure.

We argue that credit constraints not only amplify fundamental shocks, they can also lead to self-fulfilling business cycles. study a model with heterogeneous firms, in which imperfect contract enforcement implies productive firms face binding constraints, the borrowing capacity limited by expected equity value. A drop value tightens and reallocates resources from unproductive firms. Such reallocation reduces aggregate productivity, further depresses value, generating financial multiplier....

We show that cyclical fluctuations in search and recruiting intensity are quantitatively important for explaining the weak job recovery from Great Recession. demonstrate this result using an estimated labor model features endogenous intensity. Since textbook with free entry implies constant intensity, we introduce a cost of vacancy creation, so firms respond to aggregate shocks by adjusting both vacancies Fluctuations driven productivity discount factor help bridge gap between actual...

The COVID-19 pandemic has raised concerns about the future of work. may become recurrent, necessitating repeated adoptions social distancing measures (voluntary or mandatory), creating substantial uncertainty worker productivity. But robots are not susceptible to virus. Thus, pandemic-induced job boost incentive for automation. However, elevated also reduces aggregate demand and value new investment in We assess importance automation driving business cycle dynamics following an increase a...