The Labor Market in Real Business Cycle Theory

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Creator Series Issue number
  • Vol. 16, No. 2
Date created
  • 1992 Spring
Abstract

  • The standard real business cycle model fails to adequately account for two facts found in the U.S. data: the fact that hours worked fluctuate considerably more than productivity and the fact that the correlation between hours worked and productivity is close to zero. In this paper, in a unified framework, the authors describe and analyze four extensions of the standard model, by introducing nonseparable leisure, indivisible labor, government spending, and household production.

Related information

  • Published In: Real Business Cycles: A Reader (1998, pp. 168-178)

  • Published In: The Rational Expectations Revolution: Readings from the Front Line (1994, pp. 335-353)

Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
Publisher
  • Federal Reserve Bank of Minneapolis
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