Skip to main content

The Labor Market in Real Business Cycle Theory

Quarterly Review 1621 | Spring 1992

Download PDF

Authors

The Labor Market in Real Business Cycle Theory

Abstract

The standard real business cycle model fails to adequately account for two facts found in the U.S. data: the fact that hours worked fluctuate considerably more than productivity and the fact that the correlation between hours worked and productivity is close to zero. In this paper, in a unified framework, the authors describe and analyze four extensions of the standard model, by introducing nonseparable leisure, indivisible labor, government spending, and household production.


Published In: _Real Business Cycles: A Reader_ (1998, pp. 168-178)
Published In: _The Rational Expectations Revolution: Readings from the Front Line_ (1994, pp. 335-353)