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Search and Matching Model
It should be clear to you fiom the earlier section that there are a variety of models under the rubric of search theory. In this section we examine o,ne such model at close quarters. Peter Howitt originally developed the model as "Business Cycles with Costly Search and Recruiting" in the Quarterly Journal of Econometrics in 1988. The exposition here is based on Blanchard and Fischer (2000). Unlike in other sections of this unit, the exposition in this section is necessarily more technical. It is important to follow it through, perhaps with the help of the book, in order to get a flavour of the kind of analysis that you will find in the literature today. The approach is descriptive and the use of equations is minimised. Going through equations, however, can add to the. understanding of the expounded ideas and you are advised to follow the equations-based exposition of the model in Blanchard and Fischer (2000).
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