RBC Models and the Hours-Wages Puzzle: Puzzle Solved!

• Authors: Vasilev Aleksandar
• Languages of publication: EN

Abstracts

EN

This paper shows that a modified real business cycle (RBC) model, one that includes home production and fiscal spending shocks, can solve one of the RBC puzzles and generates zero correlation between wages and hours. In addition, the micro-founded model presented here provides a sound theoretical model to analyze fiscal policy in a neoclassical framework and is able to capture many aspects of the data that the benchmark RBC model was missing

Keywords

EN

fiscal policy; home production; government spending shock; indivisible labor

• Publisher: Wydział Nauk Ekonomicznych Uniwersytetu Warszawskiego
• Journal: Ekonomia. Rynek, Gospodarka, Społeczeństwo
• Year: 2015
• Issue: 41
• Pages: 117-130

Contributors

author

Vasilev Aleksandar

• CERGE-EI Affiliate Fellow, Department of Economics, American University in Bulgaria

References

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Identifiers

DOI

10.17451/eko/41/2015/108