Chapter 10Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations
American Economic Review 82(3), June 1992, 430-450.
Hours worked and the return to working are weakly correlated. Traditionally, the ability to account for this fact has been a litmus test for macroeconomic models. Existing real-business-cycle models fail this test dramatically. We modify prototypical real-business-cycle models by allowing government consumption shocks to influence labor-market dynamics. This modification can, in principle, bring the models into closer conformity with the data. Our empirical results indicate that it does. (JEL E32, C12, C52, C13, C51)
In this paper, we assess the quantitative ...
Get Real Business Cycles now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
