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Substitution over Time in Work and Consumption

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  • Robert E. Hall

Abstract

Sir John Hick's Value and Capital provided the theoretical foundation for an important element of modern macroeconomics. Intertemporal substitution - deferral or acceleration of economic activity in response to the real interest rate and other incentives - is the mechanism generally relied upon in equilibrium theories of macroeconomics to explain the irregular evolution of the economy over time. Even theorists who question the pure market-clearing paradigm are concerned with intertemporal substitution in measuring deadweight burden of fluctuations. This paper surveys recent empirical evidence on intertemporal substitution with regard to the type of fluctuations model introduced in Value and Capital.

Suggested Citation

  • Robert E. Hall, 1988. "Substitution over Time in Work and Consumption," NBER Working Papers 2789, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2789
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    File URL: http://www.nber.org/papers/w2789.pdf
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    Cited by:

    1. Felteau, Claude, 1989. "Commentaire sur le texte de Bernard Fortin," L'Actualité Economique, Société Canadienne de Science Economique, vol. 65(4), pages 508-514, décembre.
    2. Boldrin, Michael & Horvath, Michael, 1995. "Labor Contracts and Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 972-1004, October.
    3. Bianconi, Marcelo, 1995. "Fiscal policy in a simple two-country dynamic model," Journal of Economic Dynamics and Control, Elsevier, vol. 19(1-2), pages 395-419.
    4. R. Blundell & M. Browning & C. Mehgir, 1989. "A Microeconomic Model of Intertemporal Substitution and Consumer Demand," Department of Economics Working Papers 1989-02, McMaster University.
    5. Díaz-Giménez, Javier, 1991. "Business cycle fluctuations and the cost of insurrance in computable heterogeneous agent economies," UC3M Working papers. Economics 2795, Universidad Carlos III de Madrid. Departamento de Economía.

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