Arbeitspapier
Labor productivity, effort and the euro area business cycle
The Euro Area is characterized by little variation in unemployment and strongly procyclical labor productivity. We capture both characteristics in a New Keynesian business cycle model with labor search frictions, where labor can vary along three margins: employment, hours, and effort. We estimate the model with Bayesian methods and find evidence for a significant use of the effort margin in generating procyclical productivity. We show that a model with labor effort is more successful at matching the business cycle facts than is one with variable capital utilization or dominant technology shocks. Finally, we demonstrate that effort dampens the response of inflation to exogenous shocks.
- ISBN
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978-3-95729-649-8
- Language
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Englisch
- Bibliographic citation
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Series: Deutsche Bundesbank Discussion Paper ; No. 44/2019
- Classification
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Wirtschaft
Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
- Subject
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effort
labor utilization
labor productivity
inflation
- Event
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Geistige Schöpfung
- (who)
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Lewis, Vivien
Villa, Stefania
Wolters, Maik H.
- Event
-
Veröffentlichung
- (who)
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Deutsche Bundesbank
- (where)
-
Frankfurt a. M.
- (when)
-
2019
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Lewis, Vivien
- Villa, Stefania
- Wolters, Maik H.
- Deutsche Bundesbank
Time of origin
- 2019
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