Technology Shock and Employment under Catching up with the Joneses

Following a positive technology shock, a flexible price monetary model with catching up with the Joneses utility function can easily generate a negative and persistent decline in employment. When the effect of relative consumption is large, the model also produces a small short run response of output to a technology shock.

Asymmetric Adjustment Costs and Aggregate Job Flows: Specification, Estimation and Testing with French Data

This paper aims to study whether a simple asymmetric adjustment costs model with tractable heterogeneity can account for the observed distribution of French aggregate job flows. Each firm chooses endogenously its level of hiring or firing depending on the level of a specific technology shock. These policy rules allows, via aggregation, to account for dynamics in aggregate job flows. The deep parameters of the model are then estimated using the Simulated Method of Moments. We then show that the model is able to match some key features of the French aggregate job flows, but the results appears sensitive to the level of heterogeneity.asymmetric adjustment costs