Ilaski Barañano Mentxaka () (UPV/EHU) M. Paz Moral () (UPV/EHU)
Abstract
The aim of this paper is to analyze whether endogenous growth RBC models are consistent with two stylized facts about U.S. output dynamics. First, GNP growth is positively correlated in the short run and it has a weak negative autocorrelation over longer hozions. Second, GNP appears to have an important trend-reverting component that has hump-shaped MA representation. In particular, this article considers a stochastic version of Lucas´(1988) model in the absence of externalities in discrete time with two modifications: agents derive utility not only from consumption but also from leisure and labor adjustment cost are included. Results reveal that combining the endognous 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 which, in turn, improves the model´s ability to generate realistic output dynamics.
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Paper provided by Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I in its series IKERLANAK with number
200305.
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Find related papers by JEL classification: E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing
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