This paper explores some macroeconomic implications of including household production in an otherwise standard real business cycle model. We calibrate the model based on microeconomic evidence and long run considerations, simulate it, and examine its statistical properties Our finding is that introducing home production significantly improves the quantitative performance of the standard model along several dimensions. It also implies a very different interpretation of the nature of aggregate fluctuations.
Published in: _Journal of Political Economy_ (Vol. 99, No. 6, December 1991, pp. 1166-1187) https://doi.org/10.1086/261796.
Published in: _Business cycle theory_ (1995, pp. 473-494)