Arbeitspapier
The output gap, the labor wedge, and the dynamic behavior of hours
We use a standard quantitative business cycle model with nominal price and wage rigidities to estimate two measures of economic ineffciency in recent U.S. data: the output gap - the gap between the actual and effcient levels of output - and the labor wedge - the wedge between households' marginal rate of substitution and firms' marginal product of labor. We establish three results. (i ) The output gap and the labor wedge are closely related, suggesting that most ineffciencies in output are due to the ineffcient allocation of labor. (ii ) The estimates are sensitive to the structural interpretation of shocks to the labor market, which is ambiguous in the model. (iii ) Movements in hours worked are essentially exogenous, directly driven by labor market shocks, whereas wage rigidities generate a markup of the real wage over the marginal rate of substitution that is acyclical. We conclude that the model fails in two important respects: it does not give clear guidance concerning the effciency of business cycle uctuations, and it provides an unsatisfactory explanation of labor market and business cycle dynamics.
- Sprache
-
Englisch
- Erschienen in
-
Series: Sveriges Riksbank Working Paper Series ; No. 246
- Klassifikation
-
Wirtschaft
Business Fluctuations; Cycles
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Monetary Policy
- Thema
-
Business cycles
Effciency
Labor markets
Monetary policy
Konjunktur
Geldpolitik
Arbeitsmarkt
Wirtschaftspotenzial
Theorie
USA
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Sala, Luca
Söderström, Ulf
Trigari, Antonella
- Ereignis
-
Veröffentlichung
- (wer)
-
Sveriges Riksbank
- (wo)
-
Stockholm
- (wann)
-
2010
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Sala, Luca
- Söderström, Ulf
- Trigari, Antonella
- Sveriges Riksbank
Entstanden
- 2010
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