DP16077 The Fundamental Surplus Strikes Again

Author(s): Lars Ljungqvist, Thomas J Sargent
Publication Date: April 2021
Keyword(s): alternating offer bargaining, Business cycle, DSGE, Fundamental surplus, Matching Models, unemployment
JEL(s): E24, E32
Programme Areas: Labour Economics, Monetary Economics and Fluctuations
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16077

The fundamental surplus isolates parameters that determine how sensitively unemployment respond to productivity shocks in the matching models of Christiano, Eichenbaum and Trabandt (2016 and forthcoming) under either Nash bargaining or alternating-offer bargaining. Those models thus join a collection of models in which diverse forces are intermediated through the fundamental surplus.