Hostname: page-component-78c5997874-4rdpn Total loading time: 0 Render date: 2024-11-13T06:54:55.976Z Has data issue: false hasContentIssue false
  • English
  • Français

HOW DIFFERENT IS THE CYCLICAL BEHAVIOR OF HOME PRODUCTION ACROSS COUNTRIES?

Published online by Cambridge University Press:  18 January 2007

WILLIAM BLANKENAU  and
M. AYHAN KOSE
WILLIAM BLANKENAU
Affiliation:
Kansas State University
M. AYHAN KOSE
Affiliation:
International Monetary Fund
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper studies stylized business-cycle properties of household production in four industrialized countries (Canada, the United States, Germany, and Japan). We employ a dynamic small open-economy business-cycle model that incorporates a household production sector. We use the model to generate data on home output, hours worked in the home sector, and hours spent on leisure. We find that in each country, home output is more volatile than market output, whereas home sector hours are about as volatile as those in the market sector. In each country, leisure is the least volatile series. Leisure hours and home hours are countercyclical in all countries, and home output is not highly correlated with market output. Home sector variables are generally less persistent than market variables and cross-country correlations related to home production tend to be lower than those related to market production. These findings demonstrate that despite some well-known structural differences in labor markets, the cyclical features of home sector variables are similar across the countries we consider.

Keywords

Business CyclesHome (Nonmarket) ProductionGeneral Equilibrium
Type
ARTICLES
Information
Macroeconomic Dynamics , Volume 11 , Issue 1 , February 2007 , pp. 56 - 78
Copyright
© 2007 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Backus David K., Patrick J. Kehoe and Finn E. Kydland 1995 International business cycles: Theory and evidence. In Thomas Cooley (ed.), Frontiers of Business Cycle Research, pp. 331– 357. Princeton, NJ: Princeton University Press.
Baxter Marianne 1996 Are consumer durables important for businessl cycles? Review of Economics and Statistics 78, 147– 155.Google Scholar
Baxter Marianne and Urban J. Jermann 1999 Household production and the excess sensitivity of consumption to current income. American Economic Review 89, 902– 920.Google Scholar
Baxter Marianne and Robert G. King 1998 Productive Externalities and Business Cycles. Working Paper, University of Virginia.
Beauchemin Kenneth R. 2000 Whither the Stock of Public Capital? Working Paper, State University of New York at Albany.
Benhabib Jess, Richard Rogerson and Randall Wright 1991 Homework on labor economics: Household production and aggregate fluctuations. Journal of Political Economy 99, 1166– 1187.Google Scholar
Bertola Giuseppe and Richard Rogerson 1997 Institutions and labor reallocation. European Economic Review 41, 1147– 1172.Google Scholar
Blankenau William, M. Ayhan Kose and Kei-Mu Yi 2001 Can world real interest rates explain business cycles in a small open economy? Journal of Economic Dynamics and Control 25, 867– 899.Google Scholar
Bonke Jens 1992 Distribution of economic resources: Implications of including household production. Review of Income and Wealth 38, 281– 293.Google Scholar
Bonke Jens 1995 Education, Work, and Gender: An International Comparison. Working Paper, EUF 95/4, European University Institute.
Busato Francesco and Bruno Chiarini 2004 The Non-Market Sector in Europe and in the United States: Underground Activities and Home Production. Working Paper, University of Napoli.
Canova Fabio and Angel J. Ubide 1998 International business cycles, financial markets and household production. Journal of Economic Dynamics and Control 22, 545– 572.Google Scholar
Christodoulakis Nicos, Sophia P. Dimelis and Tryphon Kollintzas 1995 Comparisons of business cycles in the EC: Idiosyncrasies and regularities. Economica 62, 1– 27.Google Scholar
Eichenbaum Martin and Lars P. Hansen 1990 Estimating models with intertemporal substitution using aggregate time series data. Journal of Business and Economic Statistics 8, 53– 69.Google Scholar
Eisner Robert 1988 Extended accounts for national income product. Journal of Economic Literature 26, 1611– 1684.Google Scholar
Genay Hesna and Prakash Loungani 1997 Labor market fluctuations in japan and the U.S.: How similar are they? Federal Reserve Bank of Chicago Economic Perspectives 21, 15– 28.Google Scholar
Gomme Paul, Peter Rupert and Finn Kydland 2001 Time-to-build and household production. Journal of Political Economy 109, 1115– 1131.Google Scholar
Greenwood Jeremy and Zvi Hercowitz 1991 The allocation of capital and time over the business cycle. Journal of Political Economy 99, 1188– 1214.Google Scholar
Greenwood Jeremy, Richard Rogerson and Randall Wright 1995 Household production in real business cycle theory. In Thomas Cooley (ed.), Frontiers of Business Cycle Research, pp. 157– 174. Princeton, NJ: Princeton University Press.
Gronau Reuben 1986 Home production—A survey. In Orley Ashenfelter and Richard Layard (eds.), Handbook of Labor Economics, pp. 273– 304. Amsterdam: North-Holland.
Gronau Reuben and Daniel S. Hamermesh 2006 Time vs. goods: The value of measuring household production technologies. In Review of Income and Wealth, forthcoming.
Ingram Beth, Narayana Kocherlakota and N.E. Savin 1994a Explaining business cycles: A multiple shock approach. Journal of Monetary Economics 34, 415– 428.Google Scholar
Ingram Beth, Narayana Kocherlakota and N.E. Savin 1994b Rational Expectations Shock Estimation. Mimeo, University of Iowa.
Ingram Beth, Narayana Kocherlakota and N.E. Savin 1997 Using theory for measurement: An analysis of the cyclical behavior of home production. Journal of Monetary Economics 40, 435– 456.Google Scholar
Juster F. Thomas and Frank P. Stafford 1991 The allocation of time: Empirical findings, behavioral models, and problems of measurement. Journal of Economic Literature 29, 471– 522.Google Scholar
Kim Sunghyun H. and M. Ayhan Kose 2003 Dynamics of open economy business cycle models: Understanding the role of the discount factor. Macroeconomic Dynamics 7, 263– 290.Google Scholar
Kose M. Ayhan 2002 Explaining business cycles in small open economies. Journal of International Economics 56, 299– 327.Google Scholar
Kose M. Ayhan, Chris Otrok and Charles Whiteman 2003 International business cycles: World, region, and country specific factors. American Economic Review 93, 1216– 1239.Google Scholar
Kose M. Ayhan and Kei-Mu Yi 2001 International trade and business cycles. American Economic Review 91, 371– 375.Google Scholar
McGrattan Ellen, Richard Rogerson and Randall Wright 1997 An equilibrium model of the business cycle with household production and fiscal policy. International Economic Review 38, 267– 290.Google Scholar
Parente Stephen L., Richard Rogerson and Randall Wright 2000 Homework in development economics: Household production and the wealth of nations. Journal of Political Economy 108, 680– 687.Google Scholar
Rogerson Richard, Peter Rupert and Randall Wright 1995 Estimating substitution elasticities in models with home production. Economic Theory 6, 179– 193.Google Scholar
Siebert Horst 1997 Structural Change and Labor Market Flexibility: Experience in Selected OECD Countries. Institute fur Weltwirtschaft an der Universitat Kiel.
Smith Grogor W. and Stanley E. Zin 1997 Real business cycle realizations. Carnegie–Rochester Series on Public Policy 47, 243– 280.Google Scholar
Wrase Jeff 2001 The interplay between home production and business activity. Business Review of the Federal Reserve Bank of Philadelphia Q2, 23– 29.Google Scholar
Zimmermann Christian 1995 International Trade over the Business Cycle: Stylized Facts and Remaining Puzzles. Working Paper, University of Quebec at Montreal.