Rule-of-thumb consumers, productivity and hours

Preprint
Publisher Website
Google Scholar
  • 1 January 2007
    • preprint
      • Published in RePEc
Abstract
In this paper we study the transmission mechanisms of productivity shocks in a model with rule-of-thumb consumers. In the literature, this financial friction has been studied only with reference to fiscal shocks. We show that the presence of rule-of-thumb consumers is also very helpful in accounting for recent empirical evidence on productivity shocks. Rule-of-thumb agents, together with nominal and real rigidities, play an important role in reproducing the negative response of hours and the delayed responses of output and consumption after a productivity shock.
All Related Versions

This publication has 0 references indexed in Scilit: