By Martin Gervais, Nir Jaimovich, Henry Siu and Yaniv Yedid-Levi
http://d.repec.org/n?u=RePEc:nbr:nberwo:19767&r=dge
The search-and-matching model of the labor market fails to match two important business cycle facts: (i) a high volatility of unemployment relative to labor productivity, and (ii) a mild correlation between these two variables. We address these shortcomings by focusing on technological learning-by-doing: the notion that it takes workers time using a technology before reaching their full productive potential with it. We consider a novel source of business cycles, namely, fluctuations in the speed of technological learning and show that a search-and-matching model featuring such shocks can account for both facts. Moreover, our model provides a new interpretation of recently discussed “news shocks.”
Given the unusually large number of papers in the last NEP-DGE report, I am selecting a second paper for the blog. It is also a paper that mixes to good effect two literatures: news shocks and…
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Utopia, you are standing in it! 
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