From the Great Inflation to the Great Moderation: Assessing the Roles of Firm-Specific Labor, Sticky Prices and Labor Supply Shocks

2008 ◽  
Author(s):  
Maher Khaznaji ◽  
Louis Phaneuf
Keyword(s):  
Labor Supply ◽  
Sticky Prices ◽  
Great Moderation ◽  
Supply Shocks ◽  
Great Inflation

Financial Amplification of Labor Supply Shocks

2020 ◽  
Author(s):  
Nina Biljanovska ◽  
Alexandros Vardoulakis
Keyword(s):  
Labor Supply ◽  
Supply Shocks

scholarly journals AGING, THE GREAT MODERATION, AND BUSINESS-CYCLE VOLATILITY IN A LIFE-CYCLE MODEL

2016 ◽  
Vol 21 (2) ◽  
pp. 362-383 ◽  
Author(s):  
Burkhard Heer ◽  
Stefan Rohrbacher ◽  
Christian Scharrer
Keyword(s):  
Life Cycle ◽  
Labor Supply ◽  
Overlapping Generations ◽  
Empirical Studies ◽  
Output Volatility ◽  
Great Moderation ◽  
Overlapping Generations Model ◽  
Age Composition ◽  
The Impact ◽  
Shaped Pattern

According to empirical studies, the life cycle of labor supply volatility exhibits a U-shaped pattern. This may lead to the conclusion that demographic change induces a drop in output volatility. We present an overlapping-generations model that replicates the empirically observed pattern and study the impact of demographic transition on output volatility. We find that the change in age composition itself has only a marginal influence on output volatility, as the mitigating effect of more individuals with lower labor supply volatilities is compensated for by higher age-specific labor shares. Instead, the driving force behind the Great Moderation in our model is the downward shift of the age-specific labor supply volatility curve.

scholarly journals Financial Amplification of Labor Supply Shocks

2020 ◽  
Vol 20 (189) ◽  
Author(s):  
Nina Biljanovska ◽  
Alexandros Vardoulakis
Keyword(s):  
Labor Supply ◽  
Financial Frictions ◽  
Financing Constraints ◽  
Macroeconomic Model ◽  
Policy Responses ◽  
Tax Subsidy ◽  
Pecuniary Externality ◽  
Supply Shocks ◽  
Labor Tax ◽  
Factors Of Production

We study how financial frictions amplify labor supply shocks in a macroeconomic model with occasionally binding financing constraints. Workers supply labor to entrepreneurs who borrow to purchase factors of production. Borrowing capacity is restricted by the value of capital, generating a pecuniary externality when financing constraints bind. Additionally, there is a distributive externality operating through wages. The planner’s allocation can be decentralized with two instruments: a credit tax/subsidy and a labor tax/subsidy. Labor shocks, such as the COVID-19 shock, amplify the policy responses, which critically depend on whether financing constraints bind or not.

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