Learning-by-Doing or Habit Formation?
Hafedh Bouakez () and
Takashi Kano ()
Staff Working Papers from Bank of Canada
In a recent paper, Chang, Gomes, and Schorfheide (2002) extend the standard real business cycle (RBC) model to allow for a learning-by-doing (LBD) mechanism whereby current labour supply affects future productivity. They show that this feature magnifies the propagation of shocks and improves the matching performance of the standard RBC model. In this paper, the authors show that the LBD model is nearly observationally equivalent to an RBC model with habit formation in labour (or, equivalently, in leisure). Under the same calibration of the parameters, the two models share the same equilibrium paths of output, consumption, and investment, but have different implications for hours worked. Using Bayesian techniques, the authors investigate which of the LBD and habit models fits the U.S. data best. Their results suggest that the habit specification is more strongly supported by the data.
Keywords: Business fluctuations and cycles; Labour markets; Economic models; Econometric and statistical methods (search for similar items in EconPapers)
JEL-codes: C52 E32 J22 (search for similar items in EconPapers)
Pages: 31 pages
New Economics Papers: this item is included in nep-bec and nep-dge
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Journal Article: Learning-by-Doing or Habit Formation? (2006)
Working Paper: Learning-by-Doing or Habit Formation? (2005)
Working Paper: Learning-by-doing or Habit Formation? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:05-15
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