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

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'.

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Year of publication:	2012
Authors:	Albonico, Alice ; Kalyvitis, Sarantis ; Pappa, Evi
Publisher:	Pavia : Università degli Studi di Pavia, Dipartimento di Economia Politica e Metodi Quantitativi (EPMQ)
Subject:	technology shocks \| productivity-hours puzzle \| investment adjustment costs \| wealth effect

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Series:	Quaderni di Dipartimento ; 164
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	783567987 [GVK] hdl:10419/95263 [Handle] RePEc:pav:wpaper:164 [RePEc]
Classification:	E22 - Capital; Investment (including Inventories); Capacity ; E32 - Business Fluctuations; Cycles
Source:	EconStor

Persistent link: https://www.econbiz.de/10010335251

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

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