Dynamics of the Planning Solution in the Textbook Model of Labor Market Search and Matching
9 Pages Posted: 29 May 2003
Date Written: May 27, 2003
Abstract
This paper takes a discrete-time adaptation of the continuous-time matching economy of Pissarides (1990, 2001) discussed in Ljungqvist and Sargent (2000) and computes the solution to the dynamic planning problem. The solution is shown to be completely characterized by a first-order, non-linear map which admits a unique stationary solution that is dynamically unapproachable from an arbitrary set of initial conditions. Oscillatory solutions are possible but there is no possibility of periodic solutions.
JEL Classification: J64
Suggested Citation: Suggested Citation
Bunzel, Helle and Bhattacharya, Joydeep, Dynamics of the Planning Solution in the Textbook Model of Labor Market Search and Matching (May 27, 2003). Available at SSRN: https://ssrn.com/abstract=383540 or http://dx.doi.org/10.2139/ssrn.383540
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