Intertemporal Substitution in Macroeconomics
By N. Mankiw, Julio J. Rotemberg, Lawrence H. Summers. 2018
476 citations recorded by the source corpus.
Modern neoclassical business cycle theories posit that the observed fluctuations in consumption and employment correspond to decisions of an optimizing representative individual. We estimate three first-order conditions that represent three tradeoffs faced by such an optimizing individual. He can trade off present for future consumption, present for future leisure, and present consumption for present leisure. The aggregate U. S. data lend no support to this model. The overidentifying restrictions are rejected, and the estimated utility function is often convex. Even when it is concave, the estimates imply that either consumption or leisure is an inferior good.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/3284e7c7f1954ff588c0733b240182fd3a77b95c
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
Citations in the corpus
- Regime dependence of the fiscal multiplier (2012, background): “…cost of trading o leisure against consumption is equal to the real wage), and (iii) the optimal decision making of the rm ensures that the marginal product of 9Critical evaluations of this issue include Mankiw et al. (1985), Summers (1986), Rotemberg and Woodford (1996), and Schmidt Grohe (2001).”
- Confidence, Crashes and Animal Spirits (2012, unknown): “Further, the extent to which the RBC model fails badly is connected with the implausibility of the labour supply equation which forces hours worked and consumption to move in opposite directions as long as leisure is a normal good (Mankiw et al., 1985).”
- OPTIMAL PORTFOLIO, CONSUMPTION‐LEISURE AND RETIREMENT CHOICE PROBLEM WITH CES UTILITY (2008, unknown): “However, consideration of flexible labor supply has contributed greatly to the understanding of macroeconomic labor supply, consumption and asset prices (see, e.g., Mankiw et al. 1985; Eichenbaum et al. 1988; Kennan 1988; Basak 1999).”