Intertemporal Substitution, Money, and Aggregate Labor Supply

Dutkowsky, Donald H.; Dunsky, Robert M.

doi:10.2307/2078024

Cited by 15 publications

(10 citation statements)

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“…Comparing our results with previous studies, we can see that our estimate of the elasticity of labor supply with respect to real wages is substantially lower than obtained by Alogoskoufis (1987b) Dutkowsky and Dunsky (1996) and Mankiw et al (1985). In all these studies, the elasticity varies between 0.26 and 1 8 .…”

Section: Empirical Evidencecontrasting

confidence: 45%

“…For example, the findings of Hall (1980), Abowd and Card (1987), Alogoskoufis (1987aAlogoskoufis ( , 1987b, Dutkowsky and Foote (1992) and Dutkowsky and Dunsky (1996) support the hypothesis. In contrast, Card (1991) in a survey of the microeconometric literature, Altonji (1982) and Mankiw et al (1985) present evidence against the intertemporal substitution model.…”

Section: Introductionmentioning

confidence: 68%

“…The use of continuous time in this model contrasts with the most commonly used stochastic discrete time models that derive the Euler equations for consumption and labor supply (see, for example, Foote, 1992, andDunsky, 1996). However, our interest focuses on the long run steady state labor supply and not on the short run intertemporal substitution effect, which would capture transitional dynamics.…”

Section: The Modelmentioning

confidence: 99%

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The Intertemporal Substitution Model of Labor Supply in an Open Economy

Faria

León‐Ledesma

2001

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract The intertemporal substitution model of labor supply has been based on closed economy models. This paper studies the intertemporal substitution hypothesis in an open economy. It derives the long run labor supply as a function of the real wage, real interest rate and real exchange rate from a standard open economy optimizing representative agent model. The paper tests the steady state solution of the model for the US and, in order to avoid the Lucas critique, it tests for the superexogeneity of the interest rate and exchange rate. In accordance with the theory, the empirical evidence is supportive of the intertemporal substitution hypothesis, the significant impact of the real exchange rate, and is robust to the Lucas critique. Terms of use: Documents in EconStor mayJEL Classification: D90, J22, E32

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Section: Empirical Evidencecontrasting

confidence: 45%

Section: Introductionmentioning

confidence: 68%

Section: The Modelmentioning

confidence: 99%

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The Intertemporal Substitution Model of Labor Supply in an Open Economy

Faria

León‐Ledesma

2001

SSRN Journal

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“…Leisure and the nominal wage rate are constructed as in Dutkowsky and Dunsky (1996). We measure leisure as per-capita waking hours per quarter, 1547 ¼ (17 hours/ day)(91 days), minus per-capita working hours per quarter.…”

Section: Datasetmentioning

confidence: 99%

Sweep programs and optimal monetary aggregation

Jones

Dutkowsky

Elger³

2005

Journal of Banking & Finance

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“…1 Stochastic decision problems that include monetary or …nancial assets have been used to address a variety of topics including asset pricing [2,15,29,30,41,51], price dynamics [23,32,40,42,43], intertemporal substitution [26], money demand [21,33], currency substitution and exchange rates [6,34], optimal monetary policy [16,17,18,19,20,25], and monetary aggregation [3,4,5,46]. In each case, the usefulness of the model depends on the derivation of the stochastic Euler equations that characterize the model's solution.…”

Section: Introductionmentioning

confidence: 99%

Solving Stochastic Money-in-the-Utility-Function Models

Nesmith

2005

SSRN Journal

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This paper analyzes the necessary and su¢ cient conditions for solving money-inthe-utility-function models when contemporaneous asset returns are uncertain. A unique solution to such models is shown to exist under certain measurability conditions. Stochastic Euler equations, whose existence is normally assumed in these models, are then formally derived. The regularity conditions are weak, and economically innocuous. The results apply to the broad range of discrete-time monetary and …nancial models that are special cases of the model used in this paper. The method is also applicable to other dynamic models that incorporate contemporaneous uncertainty.

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Intertemporal Substitution, Money, and Aggregate Labor Supply

Cited by 15 publications

References 0 publications

The Intertemporal Substitution Model of Labor Supply in an Open Economy

The Intertemporal Substitution Model of Labor Supply in an Open Economy

Sweep programs and optimal monetary aggregation

Solving Stochastic Money-in-the-Utility-Function Models

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