Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations.
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.
Year of publication: |
1992
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Authors: | Christiano, Lawrence J ; Eichenbaum, Martin |
Published in: |
American Economic Review. - American Economic Association - AEA. - Vol. 82.1992, 3, p. 430-50
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Publisher: |
American Economic Association - AEA |
Saved in:
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