Trends in Hours, Balanced Growth, and the Role of Technology in the Business Cycle

45 Pages Posted: 14 Mar 2005 Last revised: 29 Nov 2005

See all articles by Jordi Galí

Jordi Galí

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

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Date Written: February 2005

Abstract

The present paper revisits a property embedded in most dynamic macroeconomic models: the stationarity of hours worked. First, I argue that, contrary to what is often believed, there are many reasons why hours could be nonstationary in those models, while preserving the property of balanced growth. Second, I show that the postwar evidence for most industrialized economies is clearly at odds with the assumption of stationary hours per capita. Third, I examine the implications of that evidence for the role of technology as a source of economic fluctuations in the G7 countries.

Suggested Citation

Gali, Jordi, Trends in Hours, Balanced Growth, and the Role of Technology in the Business Cycle (February 2005). NBER Working Paper No. w11130, Available at SSRN: https://ssrn.com/abstract=666010

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