The Role of Consumption-Labor Complementarity as a Source of Macroeconomic Instability
AbstractThe equilibrium ramification of a balanced budget rule are scrutinized in a one sector growth model augmented with investment frictions and a non-separable utility function in consumption and leisure. Edgeworth-complementarity between consumption and labor is formulated so as to generate a positive co-movement of consumption, output, and hours worked, as found in the data. Calibration of the model to the U.S. economy provides evidence that a balanced budget rule with a Taylor type monetary policy induce determinate equilibria.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 24816.
Date of creation: Jun 2010
Date of revision:
Fiscal-Monetary policy; Non-Separable Utility; Consumption-Labor Complementarity; Endogenous Labor; Stabilization; Determinacy; Investment;
Other versions of this item:
- Gliksberg, Baruch, . "The Role of Consumption-Labor Complementarity as a Source of Macroeconomic Instability," Working Papers WP2010/3, University of Haifa, Department of Economics, revised 01 Jun 2010.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-18 (All new papers)
- NEP-CBA-2010-09-18 (Central Banking)
- NEP-DGE-2010-09-18 (Dynamic General Equilibrium)
- NEP-MAC-2010-09-18 (Macroeconomics)
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