Abstract:
Shocks to time endowment are introduced into a real-business-cycle setup augmented with a detailed government sector. The model is calibrated to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2018). The quantitative importance of the presence of shocks to total time available to households is investigated for the magnitude of cyclical fluctuations in Bulgaria. Despite making hours worked more volatile, and wages a bit smoother, the quantitative effect of such a shock is found to be small, and thus not very important for the propagation of business cycle fluctuations.