Labor adjustment costs and complex eigenvalues

Xavier Fairise () and Patrick Fève
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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: Aggregate variables display both persistence and damped oscillations in response to temporary external shocks. The standard real business cycles (RBC) model cannot explain these patterns, because its stable eigenvalues are positive and real. We demonstrate that this model with labor adjustment costs can yield complex eigenvalues. However, numerical experiments suggest that the model cannot display distinguishable damped oscillations of aggregate variables.

Keywords: Labor adjustment costs; Business cycle model; Complex eigenvalues (search for similar items in EconPapers)
Date: 2005-09-28
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Published in Economic Theory, 2005, 29 (1), pp.95-110. ⟨10.1007/s00199-005-0007-0⟩

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Related works:
Journal Article: Labor adjustment costs and complex eigenvalues (2006)
Working Paper: Labor Adjustment Costs and Complex Eigenvalues (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04318788

DOI: 10.1007/s00199-005-0007-0

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