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Homework in Macroeconomics: Household Production and Aggregate Fluctuations

Staff Report 135 | Published January 1, 1991

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Homework in Macroeconomics: Household Production and Aggregate Fluctuations

Abstract

This paper explores some macroeconomic implications of including household production in an otherwise standard real business cycle model. We calibrate the model based on microeconomic evidence and long run considerations, simulate it, and examine its statistical properties Our finding is that introducing home production significantly improves the quantitative performance of the standard model along several dimensions. It also implies a very different interpretation of the nature of aggregate fluctuations.


Published In: Journal of Political Economy (Vol 99, Num 6, December 1991, pp. 1166-1187) https://doi.org/10.1086/261796
Published In: Business cycle theory (1995, pp. 473-494)

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