Overtime, effort and the propagation of business cycle shocks
AbstractThis paper presents and estimates a variant of Hansen and Sargent's (1988) real business cycle model with straight time and overtime. The model presented has only one latent variable, the state of technology, yet it does a better job propagating and magnifying shocks than the labor hoarding models which incorporate unobserved effort. This model, as well as a version of Burnside, Eichenbaum and Rebelo's (1993) labor hoarding model, is estimated using maximum likelihood. The maximum likelihood parameter estimates are compared to those using GMM.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Chicago in its series Working Paper Series, Macroeconomic Issues with number 94-25.
Date of creation: 1994
Date of revision:
Publication status: Published in Journal of Monetary Economics, August 1996, pp 139-160
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Other versions of this item:
- Hall, George J., 1996. "Overtime, effort, and the propagation of business cycle shocks," Journal of Monetary Economics, Elsevier, vol. 38(1), pages 139-160, August.
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