Solving the L abor Market Puzzles
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1
Solving the Labor Market Puzzles
Lectures 4 and 5
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The indivisible hours assumptions (based on Hansen 85 and Rogerson 88) Expected utility in period t is given by:
Calibration:
t
utt
ett
utt
ettt
BHCC
AChACU
)log()1()log(
)1log()log()1()1log()log( 0
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Quantitative assessment
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Shock on public expenditures
(based on Christiano and Eichenbaum 92) Utility function
Calibration
)log()log(),,( tttttt GCGCU
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Quantitative assessment
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Shock on preferences (based on Baxter and King 91)
Utility function
Equilibrium on the goods market
)log()log(),,( tttttt CCU
tttt YYIC
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Impulse response to a preference shock
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Quantitative assessment
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Labor hoarding
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Response to a positive technological shock
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Response to a positive government expenditure shock
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Quantitative assessment
Selected second moments