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- W2102254265 abstract "Most real business cycle models have a hard time jointly explaining the twin facts of strongly procyclical Solow residuals and extremely low correlations between wages and hours. We present a model that delivers both these results without using exogenous variation in total factor productivity (technology shocks). The key innovation of the paper is to add learning-by-doing to firms' technology. As a result, firms optimally vary their prices to control the amount of learning, which in turn influences future productivity. We show that exogenous variation in labor wedges (preference shocks) measured from aggregate data deliver around 50% of the standard deviation in the efficiency wedge (Solow residual) as well as realistic second moments for key aggregate variables, which is in sharp contrast to the model without learning-by-doing." @default.
- W2102254265 created "2016-06-24" @default.
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- W2102254265 date "2009-06-01" @default.
- W2102254265 modified "2023-10-18" @default.
- W2102254265 title "PROCYCLICAL SOLOW RESIDUALS WITHOUT TECHNOLOGY SHOCKS" @default.
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- W2102254265 doi "https://doi.org/10.1017/s1365100509080043" @default.
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