My macro mid-term

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."


Comments for this post are closed