Theory, measurement and calibration of macroeconomic models

Gomme, Paul; Rupert, Peter

doi:10.1016/j.jmoneco.2005.09.005

Cited by 171 publications

(102 citation statements)

References 32 publications

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“…Having considered the alternatives, we argue that the US series on the share of employees' compensation in GDP, adjusted for proprietors' income following Cooley and Prescott () and Gomme and Rupert () procedure (which we call PI 2 ‐GDP) is probably the most sound theoretically, and also has intuitive, economically interpretable empirical properties. It provides the relatively most consistent message across a range of diverse exercises and applications while remaining in agreement with known “stylized facts” formulated elsewhere in the literature (e.g., it is mean‐reverting but highly persistent, countercyclical over the short run, and has recorded a secular decline since 1970).…”

Section: Introductionmentioning

confidence: 99%

Will the “True” Labor Share Stand Up? An Applied Survey on Labor Share Measures

Mućk

McAdam

Growiec

2018

Journal of Economic Surveys

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Labor's share of income is a key variable in economics. It plays a leading role in analysis of (in)equality, globalization, technical change, growth theories, etc. Notwithstanding this broad application, there are many different definitions of the labor share. Understanding and synthesizing those differences is the purpose of this applied survey. Empirical measures may vary reflecting the allocation of income components that cannot be directly ascribed to capital or labor. We examine the alternative assumptions made in the literature in this regard and quantify and motivate the resulting discrepancies. Focusing (mostly) on US data, we show that different measures can have very distinct properties in terms of the observed stochastic trends, shares of short-, medium-, and long-run variation and volatilities, persistence and mean-reversion properties, and susceptibility to structural breaks. For instance, while "short-run" properties of the surveyed labor share measures are relatively consistent across all definitions (and countercyclical), their "medium-" and "long-run" trends may diverge substantially (and are procyclical). To substantiate our analysis, we document the implications of discrepancies in the empirical labor share definition for growth accounting, analyzing the effect of technology shocks, and for estimating inflation dynamics.

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Section: Introductionmentioning

confidence: 99%

Will the “True” Labor Share Stand Up? An Applied Survey on Labor Share Measures

Mućk

McAdam

Growiec

2018

Journal of Economic Surveys

View full text Add to dashboard Cite

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“…Construction of the empirical counterparts to the model's variables follows standard procedures in the literature, such as those in Cooley and Prescott (1995) and Gomme and Rupert (2007). The NIPA are the source for much of the derivations.…”

Section: Measurementmentioning

confidence: 99%

“…The generally accepted practice for doing so is to allocate proprietors' income to capital and labor in the same proportions as calculated for the economy as a whole (see, for example, Cooley andPrescott, 1995, andRupert, 2007). That is, if labor's share of national income is 1 -α and capital's share is α, we attribute the fraction 1 -α of the proprietor's income to labor and the fraction α to capital.…”

Section: Measurementmentioning

confidence: 99%

“…Cooley and Prescott (1995) provide an overview of the general strategy. A more detailed description of the calibration procedure can be found in Gomme and Rupert (2007).…”

Section: Parametersmentioning

confidence: 99%

“…The remaining observations are based on updates of Gomme and Rupert (2007). The calibrated parameter values are summarized in Table 2, and values for steady-state variables in the model are reported in Table 3.…”

Section: Parametersmentioning

confidence: 99%

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