Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
Business cycle models with search-matching frictions are studied to evaluate the importance of general equilibrium effects generated by movements in the stochastic discount factor and the income effect on labor supply. Without variable work hours, the general equilibrium effect works only through the stochastic discount factor and is quantitatively very weak. With variable work hours, the income effect generates procyclical movements in the value of leisure and the marginal hourly wage rate. This effect is sizeable and dampens labor market fluctuations.