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

Aleksandar Vasilev

EconStor Open Access Articles and Book Chapters, 2015, vol. 41, 117-130

Abstract: 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: fiscal policy; home production; government spending shock; indivisible labor (search for similar items in EconPapers)
JEL-codes: C63 E32 E62 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: RBC Models and the Hours-Wages Puzzle: Puzzle Solved! (2015)
Working Paper: RBC Models and the Hours-Wages Puzzle: Puzzle Solved! (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:142147

DOI: 10.17451/eko/41/2015/108

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