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The Business Cycle and the Life Cycle

In: NBER Macroeconomics Annual 2004, Volume 19

  • Paul Gomme
  • Richard Rogerson
  • Peter Rupert
  • Randall Wright

The paper documents how cyclical fluctuations in market work vary over the life cycle and then assesses the predictions of a life-cycle version of the growth model for those observations. The analysis yields a simple but striking finding. The main discrepancy between the model and that data lies in the inability of the model to account for fluctuations in hours for individuals in the first half of their life cycle. The predictions for those in the latter half of the life cycle are quite close to the data.

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This chapter was published in:
  • Mark Gertler & Kenneth Rogoff, 2005. "NBER Macroeconomics Annual 2004, Volume 19," NBER Books, National Bureau of Economic Research, Inc, number gert05-1, May.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 6673.
    Handle: RePEc:nbr:nberch:6673
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    23. Christiano, Lawrence J & Eichenbaum, Martin, 1992. "Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations," American Economic Review, American Economic Association, vol. 82(3), pages 430-50, June.
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    25. Joseph Altonji, 1984. "Intertemporal Substitution in Labor Supply: Evidence from Micro Data," Working Papers 562, Princeton University, Department of Economics, Industrial Relations Section..
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    27. Oliver Jean Blanchard & Peter Diamond, 1990. "The Cyclical Behovior of the Gross Flows of U.S. Workers," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(2), pages 85-156.
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    29. Gary D. Hansen & Randall Wright, 1992. "The labor market in real business cycle theory," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 2-12.
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