Labor-Supply Shifts and Economic Fluctuations

Yongsung Chang and Frank Schorfheide

Macroeconomics from University Library of Munich, Germany

Abstract: We investigate the role of labor-supply shifts in economic fluctuations. A new VAR identification scheme for labor supply shocks is proposed. According to our VAR analysis of post-war U.S. data, labor-supply shifts account for about half the variation in hours and one-fifth of variation in aggregate output. To assess the role of labor-supply shifts in a more structural framework, estimates from a dynamic stochastic general equilibrium (DSGE) model with stochastic variation in home production technology are compared to those from the VAR. To obtain a VAR identification scheme that is consistent with the DSGE model, we cannot solely rely on ``zero-restrictions''. Instead we indirectly specify a proper prior distribution for impulse responses and variance decompositions and update it through the sample information. Our method provides an alternative to recently proposed identification schemes that rely on inequality restrictions on the direction of impulse responses.

Keywords: Fluctuation of Hours; VAR Identification; Home Production; Bayesian Econometrics (search for similar items in EconPapers)
JEL-codes: C52 E32 J22 (search for similar items in EconPapers)
Date: 2002-05-01
New Economics Papers: this item is included in nep-dge
Note: Type of Document - pdf; prepared on IBM PC ; to print on HP;
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0204/0204005.pdf (application/pdf)

Related works:
Journal Article: Labor-supply shifts and economic fluctuations (2003)
Working Paper: Labor supply shifts and economic fluctuations (2003)
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:wpa:wuwpma:0204005

Access Statistics for this paper

More papers in Macroeconomics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).