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The Impact of Financial Shocks on the Labour Market Fluctuations in a Barter Economy
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Asadollah Farzin Vash   , Mohammad ali Ehsani , Hadi Keshavarz * |
| Faculty of Economics & Administrative Science -University of Mazandaran , hd.keshavarz@gmail.com |
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Abstract: (7899 Views) |
| The financial crisis of 2007 showed that the impact of financial markets on macroeconomic developments is so considerable. One of the important markets affected by financial variables, is the labor market. This paper investigates the impact of financial shocks on labor market fluctuations with financial frictions in the Iranian economy. Labor market reaches equilibrium via a search and matching process. For this purpose, a model of dynamic stochastic general equilibrium (DSGE) is designated for the Iranian economy and its parameters are estimated using Bayesian methods. Results show that a negative financial shock increases unemployment. In addition, financial frictions play an important role in amplifying the effects of financial shocks on unemployment. |
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| Keywords: Financial Shock, Financial Friction, Search and Match Process, Dynamic Stochastic General Equilibrium (DSGE). |
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Type of Study: Applicable |
Subject:
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