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

46 Pages Posted: 14 Jun 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 non-stationary in those models, while preserving the property of balanced growth. Second, I show that the post-war 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.

Keywords: Real business cycles, technology shocks, non-stationary hours

JEL Classification: E32

Suggested Citation

Gali, Jordi, Trends in Hours, Balanced Growth and the Role of Technology in the Business Cycle (February 2005). CEPR Discussion Paper No. 4915, Available at SSRN: https://ssrn.com/abstract=743127

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