An, Sungbae; Chang, Yongsung; Kim, Sun-Bin - In: American Economic Journal: Macroeconomics 1 (2009) 2, pp. 29-54
Accounting for observed fluctuations in aggregate employment, consumption, and real wage using the optimality conditions of a representative household requires preferences that are incompatible with economic priors. In order to reconcile theory with data, we construct a model with heterogeneous...