Francois Langot

Labor productivity and the business cycle: Can R.B.C. models be saved?

Abstract Standard R.B.C. models do not enable one to reproduce the main labor market stylized facts: employment is more variable than productivity and average productivity leads the cycle. In order to mimic these features, we consider a model with indivisible labor, labor hoarding and adjustment costs. The model is then simulated and compared to U.S. stylized facts. We show that government expenditure shock and some specific labor adjustment costs are necessary to explain the lead of the average productivity over the business cycle.

Unemployment and the business cycle in a small open economy: G.M.M. estimation and testing with French data

Abstract What is a relevant model for the European business cycle? In this paper, the empirical performances of three models are compared: a canonical Walrasian R.B.C. framework, its extension to the case of a small open economy, and a version of this model with search and wage bargaining on the labor market. Structural parameters of the models are estimated using G.M.M. and their abilities to reproduce the French business cycle, taken as representative of the European business cycle, are tested. Only the small open economy with unemployment is able to generate theoretical moments that match their empirical counterparts.

FINANCING UNEMPLOYMENT BENEFITS IN THE BUSINESS CYCLE: STABILIZATION, WELFARE AND EQUITY ISSUES

We study in an stochastic intertemporal general equilibrium the implications on stabilization and welfare indicators of alternative financing schemes of unemployment benefits. The question we ask is whether or not an unemployment benefits institution can insure workers against macroeconomic risk within the business cycle.

Frictions or deadlocks? Job polarization with search and matching frictions

This paper extends Pissarides (1990)’s matching model by considering two sectors (routine and manual) and workers’ occupational choices, in the context of skill-biased demand shifts, to the detriment of routine jobs and in favour of manual jobs because of technological changes. The theoretical challenge is to investigate the reallocation process from the middle towards the bottom of the wage distribution. By using this framework, we shed light on the way in which labour market institutions affect the job polarization observed in the United States and Europe. The results of our quantitative experiments suggest that search frictions have non-trivial effects on the reallocation process and transitional dynamics of aggregate employment.

Statistical Evaluation of the RBC Model

The aim of this paper is to test, on French data, the main RBC proposition according to which technological innovations are sufficient for a calibrated neoclassical growth model to mimic the business cycle. An intertemporal optimization model with a stationary technology shock and non time-separability in consumption and leisure is developed. Using the Generalized Method of Moments, we estimate the structural parameters and then, test using statistical grounds the model’s ability to reproduce the cyclical features of the French economy. We propose an extension of Eichenbaum [1991]’s methodology to show the limit of calibration-simulation methods: as in standard macroeconometric models, the stochastic simulation takes into account the sampling uncertainty on estimated structural parameters. The model is estimated on quarterly data from 1951 to 1989. While the tests do not reject the assumption of balanced growth, they point out the model’s inability to reproduce the French business cycle.