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Output dynamics in an endogenous growth model

Author

Listed:
  • Ilaski Barañano

    (Departamento de Fundamentos del Análisis Económico I. Universidad del País Vasco)

  • M. Paz Moral

    (Departamento de Economía Aplicada III. Universidad del País Vasco)

Abstract

The aim of this paper is to assess the importance of RBC models with endogenous growth in characterizing the observed output dynamics. In particular, this article considers a stochastic version of Lucas' (1988) model in the absence of externalities in discrete time with two modifications: agents do not only derive utility from consumption but also from leisure and labor adjustment costs are included. Results reveal that combining the endogenous character of the engine of growth with labor adjustment costs may help solve the Cogley-Nason (1995) puzzle since, it provides a stronger propagation mechanism and this, in the end, improves the model''s ability to generate realistic output dynamics.

Suggested Citation

  • Ilaski Barañano & M. Paz Moral, 2003. "Output dynamics in an endogenous growth model," Economics Bulletin, AccessEcon, vol. 5(15), pages 1-13.
    • Handle: RePEc:ebl:ecbull:eb-03e30005
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    File URL: http://www.accessecon.com/pubs/EB/2003/Volume5/EB-03E30005A.pdf
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    References listed on IDEAS

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    Cited by:

    1. Barañano Mentxaka, Ilaski & Moral Zuazo, María Paz, 2007. "Consumption-Leisure Trade-offs and Persistency in Business Cycles," BILTOKI 1134-8984, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).

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    More about this item

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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