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Refinements on macroeconomic modeling: The role of non-separability and heterogeneous labor supply

  • Guerron-Quintana, Pablo A.

This paper proposes a dynamic stochastic general equilibrium model characterized by heterogenous labor schedules and non-separability between consumption and labor in the utility function. The model successfully describes output, consumption, investment, and interest rates after a monetary expansion. The proposed formulation improves on standard models by using preferences favored by the data and by requiring investment adjustment costs and habit formation parameters more in line with the micro-based evidence.

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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 32 (2008)
Issue (Month): 11 (November)
Pages: 3613-3630

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Handle: RePEc:eee:dyncon:v:32:y:2008:i:11:p:3613-3630
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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  6. Woodford, Michael, 2005. "Firm-Specific Capital and the New Keynesian Phillips Curve," MPRA Paper 825, University Library of Munich, Germany.
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  8. Giorgio Primiceri & Alejandro Justiniano, 2006. "The Time Varying Volatility of Macroeconomic Fluctuations," 2006 Meeting Papers 353, Society for Economic Dynamics.
  9. Andrew Levin & Christopher J. Erceg & Dale W. Henderson, 1999. "Optimal Monetary Policy with Staggered Wage and Price Contracts," Computing in Economics and Finance 1999 1151, Society for Computational Economics.
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  16. Lawrence J. Christiano & Jonas D.M. Fisher, 1998. "Stock market and investment good prices: implications of macroeconomics," Working Paper Series WP-98-6, Federal Reserve Bank of Chicago.
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