Hi ,I need solution for this question?
Q. Consider the search model in Pissarides (2000), i.e. suppose that
U˙ (t) = λ[L − U(t)] − M(U(t), V (t)) where U(t) is the number of unemployed people at instant t, V (t) is the number of posted, unfilled vacancies at instant t, and λ > 0 is the separation rate. Suppose, moreover, that the matching function is given by M(U, V ) = U αV 1−α where 0 < α < 1 is a parameter. For simplicity, suppose the labour force L is constant and equal to one. 1
(a) Derive the steady-state Beveridge curve, i.e. solve for V in terms of U and parameters when U˙ = 0.
(b) Draw (the qualitative features of) the steady state Beveridge curve. Hint: Consider what happens as U → 0 and U → L.
(c) Suppose U <˙ 0. Show that the Beveridge curve shifts to the right relative to when U˙ = 0 and explain why.
Recently Asked Questions
- If the use of credit cards is banned in the US, we can expect the demand for money to: 1)increase and interest rates to go down; 2)increase and interest rates
- What do economist mean when they state that a good is scarce?
- The real exchange rate of RMB keeps dropping since last year. Please state any TWO of its possible advantages towards a particular industry and any TWO