Time-Separable Preferences and Intertemporal-Substitution Models of Business Cycles
Time-separability of utility means that past work and consumption do not influence current and future tastes. This form of preferences does not restrict the size of intertemporal-substitution effects, but does place constraints on the relative responses of leisure and consumption to changes in relative prices and in permanent income. These constraints are important for evaluating the impact of shifts in expectations about the future, which play a key role in equilibrium models of the business cycle. Further, if consumption and effort are to be positively correlated over the cycle, then equilibrium theories with time-separable preferences predict a procyclical behavior for the real wage rate.
Volume (Year): 99 (1984)
Issue (Month): 4 ()
|Contact details of provider:|| |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
- McKenzie, Lionel W., 1979. "Optimal Economic Growth and Turnpike Theorems," Working Papers 267, California Institute of Technology, Division of the Humanities and Social Sciences.
- Grossman, Herschel I, 1973. "Aggregate Demand, Job Search, and Employment," Journal of Political Economy, University of Chicago Press, vol. 81(6), pages 1353-1369, Nov.-Dec..
- Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 39-69, February.
- Barro, Robert J., 1976. "Rational expectations and the role of monetary policy," Journal of Monetary Economics, Elsevier, vol. 2(1), pages 1-32, January.
When requesting a correction, please mention this item's handle: RePEc:oup:qjecon:v:99:y:1984:i:4:p:817-839.. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.