An analytical model Sample Clauses

An analytical model. The microeconomic rationale of our market labour supply model is based on Prescott (2004), which itself traces back to Kydland and Prescott (1982). The ‘real business cycle’ motivation of the latter paper is much toned down in the former one though—which suits our purpose well: we do not aim at explaining short term fluctuations around a fundamental trend. As already developed, we also abstract from addressing the complex heterogeneity of time spent off the labour market, despite the caveats expressed as early as Gronau (1977), nor do we try to build on Xxxxxx’x household production model (Xxxxxx, 1965) and the subsequent literature.1 We also differ from Prescott (2004) and Xxxxxxx et al. (2006) inasmuch as we do not aim at identifying why free time preferences vary across societies— without settling between Xxxxxxx et al.’s case for unionisation or that of Prescott for fiscal pressure, we simply consider that both putative causes can more fundamentally be interpreted as the expressions of collective preferences. What we rather do is adopt their functional form, firmly rooted in microeconomic reasoning, and use macroeconomic data to project its impact on future development trajectories. Thus, adapting Prescott (2004) we assume that the objective function of the aggregate agent of some economy over T time periods is T U =∑ ( u ( C ) + λ v ( φ ) )βt
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