Revisiting the “Productivity-Hours Puzzle” in the RBC Paradigm: The Role of Investment Adjustment Costs
AbstractConventional RBC models have been heavily criticized for their inability to generate the estimated negative correlations of hours and productivity in response to technology shocks ('productivity-hours puzzle'). In this paper we show that by just enhancing the standard frame- work with investment adjustment costs can resolve the 'productivity-hours puzzle'.
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Bibliographic InfoPaper provided by University of Pavia, Department of Economics and Quantitative Methods in its series Quaderni di Dipartimento with number 164.
Length: 18 pages
Date of creation: Feb 2012
Date of revision:
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technology shocks; productivity-hours puzzle; investment adjustment costs; wealth effect.;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-08 (All new papers)
- NEP-BEC-2012-03-08 (Business Economics)
- NEP-DGE-2012-03-08 (Dynamic General Equilibrium)
- NEP-EFF-2012-03-08 (Efficiency & Productivity)
- NEP-MAC-2012-03-08 (Macroeconomics)
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- Cristiano Cantore & Filippo Ferroni & Miguel A. León-Ledesma, 2012. "The dynamics of hours worked and technology," Banco de Espaï¿½a Working Papers 1238, Banco de Espa�a.
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