Asset Returns and Labor Supply in a Production Economy

Ivan Jaccard

Journal of Money, Credit and Banking, 2014, vol. 46, issue 5, 889-919

Abstract: The introduction of an endogenous labor decision represents a challenge for models that seek to jointly explain asset pricing and business cycle facts. This paper shows that several improvements can be made if a standard real business cycle model is augmented with a novel preference specification that increases the stochastic discount factor volatility and simultaneously reduces the wealth elasticity of labor supply.

Date: 2014
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https://doi.org/10.1111/jmcb.12133

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:46:y:2014:i:5:p:889-919

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