Abstract
The purpose of this paper is to investigate how labor and good market comovements account for aggregate fluctuations in the US economy after the first oil shock. Labor supply and labor demand are approximated by labor force and employment respectively since we do not assume market clearing at cyclical frequencies. Real wages link labor and good markets by affecting labor quantities and aggregate supply of goods. Aggregate demand for goods is expressed in terms of income determination, which is largely dominated by labor income. Finally, a money reaction function is introduced to assess the role of nominal shocks.
Support by 40% MURST funds is gratefully acknowledged. Flavio Padrini and Roger Farmer provided useful comments. Remaining errors are mine.
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© 1997 Springer-Verlag New York, Inc.
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Fiorito, R. (1997). Labor Market and Cyclical Fluctuations. In: Aoki, M., Havenner, A.M. (eds) Applications of Computer Aided Time Series Modeling. Lecture Notes in Statistics, vol 119. Springer, New York, NY. https://doi.org/10.1007/978-1-4612-2252-1_6
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DOI: https://doi.org/10.1007/978-1-4612-2252-1_6
Publisher Name: Springer, New York, NY
Print ISBN: 978-0-387-94751-8
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