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Output dynamics in an endogenous growth model

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Author Info
Ilaski Barañano () (Departamento de Fundamentos del Análisis Económico I. Universidad del País Vasco)
M. Paz Moral () (Departamento de Economía Aplicada III. Universidad del País Vasco)

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Abstract

The aim of this paper is to assess the importance of RBC models with endogenous growth in characterizing the observed output dynamics. In particular, this article considers a stochastic version of Lucas' (1988) model in the absence of externalities in discrete time with two modifications: agents do not only derive utility from consumption but also from leisure and labor adjustment costs are included. Results reveal that combining the endogenous character of the engine of growth with labor adjustment costs may help solve the Cogley-Nason (1995) puzzle since, it provides a stronger propagation mechanism and this, in the end, improves the model's ability to generate realistic output dynamics.

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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 5 (2003)
Issue (Month): 15 ()
Pages: 1-13
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:5:y:2003:i:15:p:1-13

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Related research
Keywords: endogenous growth; propagation mechanism; Real-business-cycle models;

Find related papers by JEL classification:
E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
C5 - Mathematical and Quantitative Methods - - Econometric Modeling

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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  16. repec:fth:simfra:93-03 is not listed on IDEAS
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  20. Hercowitz, Zvi & Sampson, Michael, 1991. "Output Growth, the Real Wage, and Employment Fluctuations," American Economic Review, American Economic Association, vol. 81(5), pages 1215-37, December. [Downloadable!] (restricted)
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  21. Cochrane, John H, 1988. "How Big Is the Random Walk in GNP?," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 893-920, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ilaski Barañano & Paz Moral, 2007. "Consumption-Leisure Trade-offs and Persistency in Business Cycles," BILTOKI 200705, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística). [Downloadable!]
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