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Flexible labour, income e?ects, and asset prices

Abstract:
This paper studies how ?exible labour decisions a?ect asset pricing in a Real Business Cycle model. It uses Jaimovich-Rebelo preferences with internal habits in consumption and distinguishes between two income effect channels (i) the 'habit income e?ect' channel and (ii) the 'separability income e?ect' channel. I ?nd that asset prices are superior when the ?rst channel is strong and the second is weak, this is the case of using GHH preferences with internal habits in consumption.
Publication status:
Published

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Publisher:
University of Oxford
Series:
Department of Economics Discussion Paper Series
Publication date:
2018-05-31
Paper number:
851
Keywords:
Pubs id:
1143531
Local pid:
pubs:1143531
Deposit date:
2020-12-14

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