EconPapers    
Economics at your fingertips  
 

Reconciling Jaimovich-Rebelo Preferences, Habit in Consumption and Labor Supply

Tom Holden (), Paul Levine () and Jonathan Swarbrick ()

Staff Working Papers from Bank of Canada

Abstract: This note studies a form of a utility function of consumption with habit and leisure that (a) is compatible with long-run balanced growth, (b) hits a steady-state observed target for hours worked and (c) is consistent with micro-econometric evidence for the inter-temporal elasticity of substitution and the Frisch elasticity of labor supply. We employ Jaimovich- Rebello preferences, and our results highlight a constraint on the preference parameter needed to target the steady-state Frisch elasticity. This leads to a lower bound for the latter that cannot be reconciled empirically with external habit, but the introduction of a labor wedge solves the problem. We also propose a dynamic Frisch inverse elasticity measure and examine its business cycle properties.

Keywords: Econometric and statistical methods; Inflation and prices (search for similar items in EconPapers)
JEL-codes: E21 E24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac and nep-upt
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://www.bankofcanada.ca/wp-content/uploads/2018/06/swp2018-26.pdf

Related works:
Journal Article: Reconciling Jaimovich–Rebello preferences, habit in consumption and labor supply (2018) Downloads
Working Paper: Reconciling Jaimovich-Rebello Preferences, Habit in Consumption and Labor Supply (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:18-26

Access Statistics for this paper

More papers in Staff Working Papers from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2019-12-11
Handle: RePEc:bca:bocawp:18-26