Household production and taxation in the stochastic growth model

Ellen McGrattan, Richard Rogerson and Randall Wright

No 166, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We estimate a dynamic general equilibrium model of the U.S. economy that includes an explicit household production sector. We use these estimates to investigate two issues. First, we analyze how well the model accounts for aggregate fluctuations. Second, we use the model to study the effects of fiscal policy. We find household production has a significant impact, and reject a nested specification in which changes in the home production technology do not matter for market variables. The model generates very different predictions for the effects of tax changes than similar models without home production.

Keywords: Production (Economic theory); Macroeconomics (search for similar items in EconPapers)
Date: 1993
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Citations: View citations in EconPapers (24)

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