Putting home economics into macroeconomics

Abstract

The implications of adding household production to an otherwise standard real business cycle model are explored in this article. The model developed treats the business and household sectors symmetrically. In particular, both sectors use capital and labor to produce output. The article finds that the household production model can outperform the standard model in accounting for several aspects of U.S. business cycle fluctuations. ; This article is a summary of a chapter prepared for a forthcoming book, Frontiers of Business Cycle Research, edited by Thomas F. Cooley, to be published by Princeton University Press.