50 years after George J. Stigler's seminal contributions on price and wage dispersion produced by the lack of available information, the 2010 Nobel Prize in memory of Alfred Nobel rewards three pioneers of the search and matching literature. In this article, rather than writing a new survey of the large number of contributions in this active field, we discuss some of its micro-foundations to show that they have a clear and compelling character; then we evoke the debates on the ability of the canonical macroeconomic model DMP (Diamond-Mortensen-Pissarides) to replicate stylized facts of the business cycle. We then show that unlike competitive models, the value of this model class is to generate non-trivial policy recommendations. Finally we discuss four tracks for future research: directed research; strategic wage bargaining within firms; on-the-job search; and finally, interactions with other market frictions, including financial and product markets.
|Translated title of the contribution||Nobel prize 2010: Markets with frictions|
|Number of pages||30|
|Journal||Revue d'Economie Politique|
|State||Published - Sep 1 2011|
- Business cycle
ASJC Scopus subject areas
- Political Science and International Relations