Purpose The purpose of this paper is to explore the problem of non-convex labor supply decision in an economy with both discrete and continuous labor decisions. In contrast to the setup in McGrattan et al. (1997), here each household faces an indivisible labor supply choice in the market sector,...

Purpose The author augments an otherwise standard business cycle model with a richer government sector and adds money-in-utility (MIU) considerations to study economic fluctuations. Design/methodology/approach More specifically, real money balances enter in a non-separable way with consumption...