TY - JOUR
T1 - Terms of trade shocks and endogenous search unemployment
T2 - A two-sector model with non-traded goods
AU - Xu, Xinpeng
AU - Sheng, Yu
PY - 2014/5
Y1 - 2014/5
N2 - We develop a simple and tractable two-sector search model featuring a non-traded sector and endogenous search unemployment to examine the impact of terms of trade shocks on unemployment. We show that changes in terms of trade will not only lead to employment reallocation across sectors, as in the traditional trade models, but, more importantly, impact upon search unemployment within each sector. Specifically, we show that an improvement (deterioration) of terms of trade reduces (increases) unemployment rates in both traded and non-traded sectors.
AB - We develop a simple and tractable two-sector search model featuring a non-traded sector and endogenous search unemployment to examine the impact of terms of trade shocks on unemployment. We show that changes in terms of trade will not only lead to employment reallocation across sectors, as in the traditional trade models, but, more importantly, impact upon search unemployment within each sector. Specifically, we show that an improvement (deterioration) of terms of trade reduces (increases) unemployment rates in both traded and non-traded sectors.
UR - http://www.scopus.com/inward/record.url?scp=84899550320&partnerID=8YFLogxK
U2 - 10.1111/1468-0106.12060
DO - 10.1111/1468-0106.12060
M3 - Article
SN - 1361-374X
VL - 19
SP - 201
EP - 215
JO - Pacific Economic Review
JF - Pacific Economic Review
IS - 2
ER -