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working schedules. This simple model can generate unemployment, even if wages adjust instantaneously, firms are perfectly … working for the same hours as high-skilled workers at competitive wages based on productivity. Thus our model offers an …
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"This paper shows that economic fluctuations can be largely demand-driven. In particular, the stylized open-economy business cycle regularities documented by Feldstein and Horioka (1980) and Backus, Kehoe and Kydland (JPE 1992) can be explained by the standard general equilibrium theory if...
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