Interest rate, Investment and Unemployment: State-dependent Analysis

Details

Supervisors

Oikonomou, Rigas

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [60] en sciences économiques, orientation générale

Abstract

enWe reassess a mechanism of a seminal question that seeks to explain the cyclical variations in unemployment and vacancies. To do so, we discuss conditions for why most search and matching models might not account for such cyclical variations. We then argue that the dynamics of the labor market are state-dependent, split under what we define as a low interest rates state (regime) or a high interest rates state (regime). This suggests an important role for the adjustment costs, investment, cost of capital, and productivity.