How important are shocks to the elasticity of aggregate labor supply for business cycle fluctuations?

Vasilev, Aleksandar (2022) How important are shocks to the elasticity of aggregate labor supply for business cycle fluctuations? Journal of Economics and Econometrics, 65 (2). pp. 48-67. ISSN 2032-9652

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How important are shocks to the elasticity of aggregate labor supply for business cycle fluctuations?
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Abstract

Stochastic shocks to aggregate labor supply elasticity are introduced into a real-business-cycle setup augmented with a detailed government sector. The model is calibrated to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2018). The quantitative importance of a stochastic aggregate labor supply elasticity parameter is investigated for the magnitude of the cyclical fluctuations in Bulgaria. The quantitative effect of such a stochasticity increases the variability of
hours, and lowers the correlation between hours and wages, and thus is found to be
quantitatively important for the labor market aspect of business cycles.

Keywords:business cycles, stochastic aggregate labor supply elasticity, Bulgaria
Subjects:L Social studies > L110 Applied Economics
L Social studies > L130 Macroeconomics
Divisions:Lincoln International Business School
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ID Code:49303
Deposited On:11 Jul 2022 08:23

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