Here is question number two, if you are bold try to sketch an answer in the comments.
Let us say you had a real business cycle model where production took a very long period(s) of time, rather than just a single (shorter) period. Might this help such a model explain the aggregate macroeconomic data? What might become easier and what might become harder?
Hint: One good approach is to break your answer down in the three categories of "comovement, persistence, and labor supply."
I’ve got part one, but part two is a bit trickier:
“Might this help such a model explain the aggregate macroeconomic data?”
Yes. It might.
Can we trade a good answer in the comments for one on the exam?
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