Labor productivity and the business cycle: Can R.B.C. models be saved?

Xavier Fairise () and Francois Langot
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Xavier Fairise: GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université

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Abstract: Standard R.B.C. models do not enable one to reproduce the main labor market stylized facts: employment is more variable than productivity and average productivity leads the cycle. In order to mimic these features, we consider a model with indivisible labor, labor hoarding and adjustment costs. The model is then simulated and compared to U.S. stylized facts. We show that government expenditure shock and some specific labor adjustment costs are necessary to explain the lead of the average productivity over the business cycle.

Keywords: Business cycle; Labor productivity cycle; Labor hoarding; Labor adjustment costs (search for similar items in EconPapers)
Date: 1994-10
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Published in European Economic Review, 1994, 38 (8), pp.1581-1594. ⟨10.1016/0014-2921(94)90028-0⟩

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Related works:
Journal Article: Labor productivity and the business cycle: Can R.B.C. models be saved? (1994)
Working Paper: Labor Productivity and Business Cycle: Can R.B.C. Models Be Saved? (1992)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04316504

DOI: 10.1016/0014-2921(94)90028-0

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