tag:blogger.com,1999:blog-7539577136486286096.post4215433518880507762..comments2024-03-28T02:46:41.090-05:00Comments on Supply and Demand (in that order): Flight to Quality -- Cause or Effect?Casey B. Mulliganhttp://www.blogger.com/profile/03317454408275318282noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-7539577136486286096.post-89239052039478787192008-12-23T20:58:00.000-06:002008-12-23T20:58:00.000-06:00Professor, why should labor supply be an issue her...Professor, why should labor supply be an issue here given that most adjustment happens at the extensive margin and not at the intensive margin (for institutional and technological reasons which are irrelevant at this point) and since the puzzle you reference might just be primarily a side product of assuming preferences with additive separability across time and states of nature? (Fisher Black is someone I would take to have argued this forcefully.)<BR/><BR/>Finally, it's really difficult, if not impossible, to understand recessions (as opposed to efficient fluctuations) within a framework of clearing spot labor markets with perfect information in which case we should expect to see behavior inconsistent with such a setup in the first place.Anonymousnoreply@blogger.com