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Revisiting the “Productivity-Hours Puzzle” in the RBC Paradigm: The Role of Investment Adjustment Costs

Author

Listed:
  • Alice Albonico

    (Department of Economics, University of Pavia)

  • Sarantis Kalyvitis

    (Department of International and European Economic Studies, Athens University of Economics and Business)

  • Evi Pappa

    (European University Institute, Department of Economics)

Abstract

Conventional RBC models have been heavily criticized for their inability to generate the estimated negative correlations of hours and productivity in response to technology shocks ('productivity-hours puzzle'). In this paper we show that by just enhancing the standard frame- work with investment adjustment costs can resolve the 'productivity-hours puzzle'.

Suggested Citation

  • Alice Albonico & Sarantis Kalyvitis & Evi Pappa, 2012. "Revisiting the “Productivity-Hours Puzzle” in the RBC Paradigm: The Role of Investment Adjustment Costs," Quaderni di Dipartimento 164, University of Pavia, Department of Economics and Quantitative Methods.
    • Handle: RePEc:pav:wpaper:164
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    File URL: http://dem-web.unipv.it/web/docs/dipeco/quad/ps/RePEc/pav/wpaper/q164.pdf
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    Citations

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    Cited by:

    1. Cantore, Cristiano & Ferroni, Filippo & León-Ledesma, Miguel A., 2017. "The dynamics of hours worked and technology," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 67-82.
    2. Cubizol, Damien, 2020. "Rebalancing in China: A taxation approach," China Economic Review, Elsevier, vol. 60(C).
    3. Aleksandar Vasilev, 2015. "RBC Models and the Hours-Wages Puzzle: Puzzle Solved!," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 41.
    4. Sevgi Coskun, 2016. "Labor Market Fluctuations in Developing Countries," EcoMod2016 9732, EcoMod.

    More about this item

    Keywords

    technology shocks; productivity-hours puzzle; investment adjustment costs; wealth effect.;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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