Housework and fiscal expansions
Gnocchi, Stefano (Bank of Canada)
Hauser, Daniela Stefanie (Bank of Canada)
Pappa, Evi (Universitat Autònoma de Barcelona)

Imprint:	Otawa : Bank of Canada, 2014
Description:	40 pag.
Abstract:	We build an otherwise-standard business cycle model with housework, calibrated consistently with data on time use, in order to discipline consumption-hours complementarity and relate its strength to the size of fiscal multipliers. We show that if substitutability between home and market goods is calibrated on the empirically relevant range, consumption-hours complementarity is large and the model generates fiscal multipliers that agree with the evidence. Hence, our analysis supports the relevance of consumption-hours complementarity for fiscal multipliers. However, we also find that explicitly modeling the home sector is more appealing than restricting to the consumption-leisure margin and/or to the preferences proposed by Greenwood, Hercowitz and Huffman (1988). A housework model can imply substantial complementarity, without low wealth effects contradicting the microeconomic evidence.
Grants:	Ministerio de Educación y Ciencia ECO2009-09847
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Language:	Anglès
Series:	Bank of Canada Working Paper ; 2014-34
Document:	Working paper
Subject:	Fiscal policy ; Business fluctuations and cycles
Published in:	Staff Working Papers, 34 (2014) , ISSN 1701-9397

Adreça alternativa: https://hdl.handle.net/10419/103020

40 p, 541.1 KB

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Research literature > Working papers