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4

I guess there's no easy answer. It depends on what you think the data generating process is. Let $y$ be year, $q$ be the quarter and $c$ be the country. Then $S_{y,q}$ is the USA shock at year $y$ and quarter $q$, $X_{c,y,q}$ is the observable covariates of country $c$, at year $y$ and quarter $q$ and let $Y_{c,y,q}$ be the variable of interest. From reading ...

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I am not sure if this is exactly what you are looking for, but this paper has model that sounds like what you want: Shimer, Robert, 2006. “On-the-job search and strategic bargaining, ”European EconomicReview50, 811—830. Have a look at this one too: Shimer, R. (2007). Mismatch. American Economic Review, 97(4), 1074-1101.

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This is due to the famous Lucas critique. To make long story short, in the past in the heyday of Keynesian macroeconomics it was quite normal for macroeconomists to just postulate some relationships based on relatively casual empirical observations like for example the Philips curve which says that there is positive relationship between inflation and ...

1

As a starting point, you might take a look at Stigler's model of price dispersion. Quoting from a resource I found online, George Stigler’s 1961 “The Economics of Information” begins with: "One should hardly have to tell academicians that information is a valuable resource: knowledge is power. And yet it occupies a slum dwelling in the town of ...

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