Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/113075
Authors: 
Klein, Mathias
Krause, Christopher
Year of Publication: 
2015
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Forecasting C05-V3
Abstract: 
Standard real business cycle models predict a rise in employment following a technology shock. In contrast, numerous empirical studies show that a technology shock leads to a decline in labor input. In this paper, we demonstrate that a flexible price model enriched with interpersonal comparison of consumption expenditures is able to generate a fall in employment in response to a technology shock. The negative labor response is robust to different values assigned to the inverse Frisch elastictiy of labor supply and integrating capital adjustment cost into the model.
JEL: 
D62
E24
E32
Document Type: 
Conference Paper

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