Costain, James S.Reiter, MichaelUniversitat Pompeu Fabra. Departament d'Economia i Empresa2017-07-262017-07-262003-06-01http://hdl.handle.net/10230/789This paper theoretically and empirically documents a puzzle that arises when an RBC economy with a job matching function is used to model unemployment. The standard model can generate sufficiently large cyclical fluctuations in unemployment, or a sufficiently small response of unemployment to labor market policies, but it cannot do both. Variable search and separation, finite UI benefit duration, efficiency wages, and capital all fail to resolve this puzzle. However, either sticky wages or match-specific productivity shocks can improve the model's performance by making the firm's flow of surplus more procyclical, which makes hiring more procyclical too.application/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commonsinfo:eu-repo/semantics/workingPaperreal business cyclesmatching functionunemployment insuranceMacroeconomics and International Economicsinfo:eu-repo/semantics/openAccess