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Technology Shock and Employment under Catching up with the Joneses

Author

Listed:
  • Patrick Fève

    (University of Toulouse (GREMAQ-CNRS and IDEI))

Abstract

Following a positive technology shock, a flexible price monetary model with catching up with the Joneses utility function can easily generate a negative and persistent decline in employment. When the effect of relative consumption is large, the model also produces a small short run response of output to a technology shock.

Suggested Citation

  • Patrick Fève, 2004. "Technology Shock and Employment under Catching up with the Joneses," Economics Bulletin, AccessEcon, vol. 5(3), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-04e20002
    as

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    File URL: http://www.accessecon.com/pubs/EB/2004/Volume5/EB-04E20002A.pdf
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    References listed on IDEAS

    as
    1. Abel, Andrew B, 1990. "Asset Prices under Habit Formation and Catching Up with the Joneses," American Economic Review, American Economic Association, vol. 80(2), pages 38-42, May.
    2. Wen, Yi, 2001. "Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations? Comment," Working Papers 01-19, Cornell University, Center for Analytic Economics.
    3. Hairault, Jean-Olivier & Langot, Francois & Portier, Franck, 1997. "Time to implement and aggregate fluctuations," Journal of Economic Dynamics and Control, Elsevier, vol. 22(1), pages 109-121, November.
    4. Lawrence J. Christiano & Michele Boldrin & Jonas D. M. Fisher, 2001. "Habit Persistence, Asset Returns, and the Business Cycle," American Economic Review, American Economic Association, vol. 91(1), pages 149-166, March.
    5. Lawrence J. Christiano & Richard M. Todd, 1996. "Time to plan and aggregate fluctuations," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 20(Win), pages 14-27.
    6. John Shea, 1999. "What Do Technology Shocks Do?," NBER Chapters, in: NBER Macroeconomics Annual 1998, volume 13, pages 275-322, National Bureau of Economic Research, Inc.
    7. Collard, Fabrice & Dellas, Harris, 2004. "Supply shocks and employment in an open economy," Economics Letters, Elsevier, vol. 82(2), pages 231-237, February.
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    Cited by:

    1. Francesco Furlanetto & Martin Seneca, 2012. "Rule‐of‐Thumb Consumers, Productivity, and Hours," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(2), pages 658-679, June.

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    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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