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Real Business Cycles with a Human Capital Investment Sector and Endogenous Growth: Persistence, Volatility and Labor Puzzles

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Author Info

  • Jing Dang

    ()
    (State Grid Corporation of China (SGCC))

  • Max Gillman

    ()
    (Institute of Economics - Hungarian Academy of Sciences)

  • Michal Kejak

    ()
    (The Center for Economic Research and Graduate Education of Charles University (CERGE EI))

Abstract

An identical two-sector productivity shock causes Rybczynski (1955) and Stolper and Samuelson (1941) effects that release leisure time and initially raise the relative price of human capital investment so as to favor it over goods production. Modified by having the household sector produce human capital investment sector, the RBC model follows the international approach of Maffezzoli (2000) and so adds a second sector relative to Jones et al. (2005). This captures key major US RBC data: output growth persistence, with hump-shaped impulse responses; hump-shaped physical capital investment impulse responses; Gali's (1999) negative impulse response of labour supply; and hours volatility.

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Bibliographic Info

Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 1128.

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Length: 47 pages
Date of creation: Jun 2011
Date of revision:
Handle: RePEc:has:discpr:1128

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Keywords: real business cycle; human capital; endogenous growth;

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References

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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Real Business Cycles with a Human Capital Investment Sector and Endogenous Growth: Persistence, Volatility and Labor Puzzles
    by Christian Zimmermann in NEP-DGE blog on 2011-04-14 19:22:54
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Cited by:
  1. Max Gillman, 2012. "AS-AD in the Standard Dynamic Neoclassical Model: Business Cycles and Growth Trends," CEU Working Papers 2012_8, Department of Economics, Central European University, revised 15 May 2012.
  2. Max Gillman, 2013. "Lost in Translation: Unified Consumption Theory, Dynamic AS-AD, and Business Cycles," IEHAS Discussion Papers 1305, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

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