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Real Business Cycles: sectoral versus aggregate shocks and the elasticity of demand for income in terms of work effort

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  • J. R. Presley
  • J. G. Sessions

Abstract

Real business cycle theory asserts that technological shocks are a major root cause of cyclical fluctuation, but has yet to explain how a sector technological change impacts upon other sectors of the economy to produce aggregate fluctuations in output. This paper suggest that an appropriate analytical framework with which to address the issue may be derived from the long forgotten concept of the elasticity of demand for income in terms of work effort. Our contention is that the concept could be usefully employed by contemporary real business cycle theorists to explain the macroeconomic repercussions of sectoral changes.

Suggested Citation

  • J. R. Presley & J. G. Sessions, 1997. "Real Business Cycles: sectoral versus aggregate shocks and the elasticity of demand for income in terms of work effort," Review of Political Economy, Taylor & Francis Journals, vol. 9(4), pages 479-483.
    • Handle: RePEc:taf:revpoe:v:9:y:1997:i:4:p:479-483
    DOI: 10.1080/09538259700000043
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    References listed on IDEAS

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    1. 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.
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    Cited by:

    1. Boianovsky, Mauro & Presley, John R., 2009. "The Robertson connection between the natural rates of interest and unemployment," Structural Change and Economic Dynamics, Elsevier, vol. 20(2), pages 136-150, June.

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