Intersectoral Labor Immobility,Sectoral Comovement,and News Shocks |
| |
| Authors: | MUNECHIKA KATAYAMA KWANG HWAN KIM |
| |
| Abstract: | Sectoral comovement of output and hours worked is a prominent feature of business cycle data. However, most two‐sector neoclassical models fail to generate this sectoral comovement. We construct and estimate a two‐sector neoclassical Dynamic Stochastic General Equilibrium (DGSE) model generating sectoral comovement in response to both anticipated and unanticipated shocks. The key to our model's success is a significant degree of intersectoral labor immobility, which we estimate using data on sectoral hours worked. Furthermore, we demonstrate that imperfect intersectoral labor mobility provides a better explanation for the sectoral comovement than an alternative model emphasizing the role of labor‐supply wealth effects. |
| |
| Keywords: | E13 E32 sectoral comovement labor immobility nonseparable preferences unanticipated shocks news shocks |
|
|
