Discussion paper

DP16077 The Fundamental Surplus Strikes Again

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.


Ljungqvist, L and T Sargent (2021), ‘DP16077 The Fundamental Surplus Strikes Again‘, CEPR Discussion Paper No. 16077. CEPR Press, Paris & London. https://cepr.org/publications/dp16077