A Two-Sector Search Model of an Open Economy without Capital

It has long been known that search processes on the labour market are only another form of incompleteness on this factor market. Earlier works studied search processes and the behaviour of individuals, but seldom addressed the consequences for the whole economy.1 In recent works, the search activities were simplified so that general equilibrium models can now easily be analysed.2 However, most of the papers base on models of a closed economy. On the contrary, almost all countries take the advantages trade offers so that it is desirable to have a search and matching model of an open economy.3