It is well established that U.S. business cycles have moderated since the mid 1980s, which include a decline in the volatility of hours and of the unemployment rate. This chapter applies a battery of tests to a Real Business Cycle (RBC) framework to dissect the effect of greater international integration, financial frictions, and better monetary policy on the dynamics of labor hours. While some of these factors have been identified in the literature as causes of the ‘Great Moderation’, a model-based comprehensive assessment of their relative importance, as the one presented in this chapter, is novel and sheds light into the policies that aid towards a smoother functioning of the labor market.
|Title of host publication||Employment and Labor Issues|
|Subtitle of host publication||Unemployment, Youth Employment and Child Labor|
|Publisher||Nova Science Publishers, Inc.|
|Number of pages||12|
|State||Published - 1 Jan 2010|
- Great moderation
- Labor hours