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The Business Cycle and the Life Cycle

In: NBER Macroeconomics Annual 2004, Volume 19

Listed author(s):
  • 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, October.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 6673.
    Handle: RePEc:nbr:nberch:6673
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    7. repec:wop:calsdi:97-23 is not listed on IDEAS
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    22. Mark Aguiar & Erik Hurst, 2004. "Consumption vs. Expenditure," NBER Working Papers 10307, National Bureau of Economic Research, Inc.
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    25. Paul Gomme & Finn E. Kydland & Peter Rupert, 2001. "Home Production Meets Time to Build," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1115-1131, October.
    26. Klein, Paul, 2000. "Using the generalized Schur form to solve a multivariate linear rational expectations model," Journal of Economic Dynamics and Control, Elsevier, vol. 24(10), pages 1405-1423, September.
    27. Kydland, Finn E., 1984. "Labor-force heterogeneity and the business cycle," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 21(1), pages 173-208, January.
    28. Shaw, Kathryn L, 1989. "Life-Cycle Labor Supply with Human Capital Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(2), pages 431-456, May.
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    33. Per Krusell & Anthony A. Smith & Jr., 1998. "Income and Wealth Heterogeneity in the Macroeconomy," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 867-896, October.
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