Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations
Hours worked and the return to working are weakly correlated. Traditionally, the ability to account for this fact has been a litmus test for macroeconomic models. Existing real-business-cycle models fail this test dramatically. The authors modify prototypical real-business-cycle models by allowing government consumption shocks to influence labor-market dynamics. This modification can, in principle, bring the models into closer conformity with the data. Their empirical results indicate that it does. Copyright 1992 by American Economic Association.
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Volume (Year): 82 (1992)
Issue (Month): 3 (June)
Pages: 430-50
| Handle: | RePEc:aea:aecrev:v:82:y:1992:i:3:p:430-50 |
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References listed on IDEAS
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