Objective
Not least the Great Recession shows that micro-level uncertainty and borrowing constraints have first-order macroeconomic consequences and how their fluctuations influence business cycles. To understand many aspects of business-cycles, a vast literature highlights nominal rigidities to be pivotal. Nevertheless, almost all macroeconomic models abstract from these rigidities for tractability when introducing heterogeneous agents, uncertainty, and borrowing constraints. Vice versa, the nominal-rigidities, representative-agent approach, standard in business-cycle research, ignores micro uncertainty and heterogeneity outright; again for tractability.
This significantly limits our understanding. With incomplete markets, it depresses consumption if micro uncertainty increases or borrowing constraints tighten. With flexible prices, this implies a boom driven by investment and an increase in labour supply. This contradicts empirical evidence showing that uncertainty is countercyclical. However, nominal rigidities could quantitatively align model prediction and evidence as they make aggregate output demand-determined.
This motivates the proposed research project, where the first objective is to develop a quantitative framework that merges nominal rigidities with market incompleteness. I then analyse income risk from unemployment as a propagation mechanism and fluctuations in borrowing constraints as potential drivers of business cycles.
As income risk from the labour market is a central to any incomplete markets model, these first projects are complemented by projects on the micro structure of job and worker flows, grasping frictions in hiring workers or creating jobs. These projects build on a unique data set generated by a small team around me at the Institute of Employment Research of the German Federal Employment Agency, which covers all quarterly worker- and job flows for the universe of German plants since 1975 with detailed information on workers and plants.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: https://op.europa.eu/en/web/eu-vocabularies/euroscivoc.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: https://op.europa.eu/en/web/eu-vocabularies/euroscivoc.
- social sciences economics and business economics macroeconomics
- social sciences economics and business business and management employment
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Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
ERC-2011-StG_20101124
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Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Host institution
53113 Bonn
Germany
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.