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Rule-of-thumb consumers, productivity and hours

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Author Info
Francesco Furlanetto () (Norges Bank (Central Bank of Norway))
Martin Seneca (University of Aarhus and Danmarks Nationalbank)

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Abstract

In this paper we study the transmission mechanisms of productivity shocks in a model with rule-of-thumb consumers. In the literature, this financial friction has been studied only with reference to fiscal shocks. We show that the presence of rule-of-thumb consumers is also very helpful in accounting for recent empirical evidence on productivity shocks. Rule-of-thumb agents, together with nominal and real rigidities, play an important role in reproducing the negative response of hours and the delayed responses of output and consumption after a productivity shock.

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File URL: http://www.norges-bank.no/Pages/Article____67656.aspx
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Publisher Info
Paper provided by Norges Bank in its series Working Paper with number 2007/05.

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Length: 41 pages
Date of creation: 14 Nov 2007
Date of revision:
Handle: RePEc:bno:worpap:2007_05

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Related research
Keywords: rule-of-thumb consumers; productivity shocks; nominal rigidities; real rigidities.;

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Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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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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  18. Francesco Furlanetto & Martin Seneca, 2008. "Fiscal shocks and real rigidities," Working Paper 2008/10, Norges Bank. [Downloadable!]
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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. Francesco FURLANETTO, 2007. "Fiscal Shocks and the Consumption Response when Wages are Sticky," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 07.11, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
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