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Rule-of-thumb consumers, productivity and hours

Francesco Furlanetto () and Martin Seneca

No 2007/05, Working Paper from Norges Bank

Abstract: In this paper we study the transmission mechanisms of productivity shocks in a model with rule-of-thumb consumers. In the literature, this financial friction has been studied only with reference to fiscal shocks. We show that the presence of rule-of-thumb consumers is also very helpful in accounting for recent empirical evidence on productivity shocks. Rule-of-thumb agents, together with nominal and real rigidities, play an important role in reproducing the negative response of hours and the delayed responses of output and consumption after a productivity shock.

Keywords: rule-of-thumb consumers; productivity shocks; nominal rigidities; real rigidities. (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eff and nep-mac
Date: 2007-11-14
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https://www.norges-bank.no/en/news-events/news-pub ... apers/2007/WP-20075/

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Journal Article: Rule-of-Thumb Consumers, Productivity, and Hours (2012) Downloads
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