Year: 2018
Type: article
Abstract: Sectoral comovement of output and hours worked is a prominent feature of business cycle data. However, most two‐sector neoclassical models fail to generate this sectoral comovement. We construct and estimate a two‐sector neoclassical Dynamic Stochastic General Equilibrium (DGSE) model generating sectoral comovement in response to both anticipated and unanticipated shocks. The key to our model's success is a significant degree of intersectoral labor immobility, which we estimate using data on sectoral hours worked. Furthermore, we demonstrate that imperfect intersectoral labor mobility provides a better explanation for the sectoral comovement than an alternative model emphasizing the role of labor‐supply wealth effects.
DOI: 10.1111/jmcb.12454
Authors: MUNECHIKA KATAYAMA, KWANG HWAN KIM
Institutions: Kyoto University, Yonsei University
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2293560079