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

Alice Albonico; Sarantis Kalyvitis; Evi Pappa

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 : University of Pavia, Department of Economics and Quantitative Methods
Subject:	technology shocks \| productivity-hours puzzle \| investment adjustment costs \| wealth effect \| Investition \| Investment \| Anpassungskosten \| Adjustment costs \| Schock \| Shock \| Technischer Fortschritt \| Technological change \| Konjunktur \| Business cycle \| Produktivität \| Productivity \| Real-Business-Cycle-Theorie \| Real business cycle model \| Vermögenseffekt \| Wealth effect \| Investitionsentscheidung \| Investment decision