Labor mobility in a monetary union
In: Journal of international economics, Band 137, S. 103600
ISSN: 0022-1996
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In: Journal of international economics, Band 137, S. 103600
ISSN: 0022-1996
SSRN
In: Journal of Monetary Economics, Band 79, S. 94-108
In an otherwise-standard business cycle model with housework, calibrated consistently with data on time use, we discipline complementarity between consumption and hours worked and relate its strength to the size of fiscal multipliers. Evidence on the substitutability between home and market goods confirms that complementarity is an empirically relevant driver of fiscal multipliers. However, in a housework model substantial complementarity can be generated without imposing a low wealth effect, which contradicts the microeconomic evidence. Also, explicitly modeling housework matters for assessing the welfare effects of government spending, which are understated by theories that neglect substitutability between home-produced and market goods. ; Evi Pappa gratefully acknowledges financial support from the Spanish Ministry of Education and Science through Grant ECO2009-09847, the support of the Barcelona GSE Research Network and of the Government of Catalonia.
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