Year: 1990
Type: preprint
Abstract: 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. The authors 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. Their empirical results indicate that it does. Copyright 1992 by American Economic Association.
DOI: 10.21034/dp.24
Institution: Federal Reserve Bank of Minneapolis
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2143521026