This paper argues that constraining people to choose consumption and labor under finite Shannon capacity produces results in line with U.S. business cycle data as well as secular movements in consumption and labor supply. The model has simple partial equilibrium setting in which risk averse...

This paper introduces staggered right-to-manage wage bargaining into a New Keynesian business cycle model. Our key result is that the model is able to generate persistent responses in output, inflation, and total labor input to both neutral technology and monetary policy shocks. Furthermore, we...

A body of recent empirical work has found strong evidence that the labor elasticity of supply to the firm is finite, implying that firms may have wage setting power. However, these studies capture only snapshots of the parameter. We study this parameter over a period that provides substantial...