This paper quantitatively evaluates the ability of a Kydland and Prescott type model with permanent technology shocks and labor wedges to reproduce output persistence together with persistent impulse response functions of output to permanent and transitory shocks. When calibrated on US labor market features, this model, in which technology shocks account for the bulk of output fluctuations, successfully passes the Cogley and Nason test.
Patrick Fève and Julien Matheron
Classification JEL : E32, C52.
Keywords : RBC Models, Habit Leisure, Labor Wedges, Output Persistence
Updated on: 06/12/2018 10:59