Revisiting the “Productivity-Hours Puzzle” in the RBC Paradigm: The Role of Investment Adjustment Costs
Alice Albonico (),
Sarantis Kalyvitis () and
Evi Pappa ()
No 164, Quaderni di Dipartimento from University of Pavia, Department of Economics and Quantitative Methods
Conventional RBC models have been heavily criticized for their inability to generate the estimated negative correlations of hours and productivity in response to technology shocks ('productivity-hours puzzle'). In this paper we show that by just enhancing the standard frame- work with investment adjustment costs can resolve the 'productivity-hours puzzle'.
Keywords: technology shocks; productivity-hours puzzle; investment adjustment costs; wealth effect. (search for similar items in EconPapers)
JEL-codes: E22 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge, nep-eff and nep-mac
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