@article{3a8623eadec3401681245349710e834e,
title = "Intersectoral Labor Immobility, Sectoral Comovement, and News Shocks",
abstract = "Sectoral comovement of output and hours worked is a prominent feature of business cycle data. However, most two-sector neoclassical models fail to generate this sectoral comovement. We construct and estimate a two-sector neoclassical Dynamic Stochastic General Equilibrium (DGSE) model generating sectoral comovement in response to both anticipated and unanticipated shocks. The key to our model's success is a significant degree of intersectoral labor immobility, which we estimate using data on sectoral hours worked. Furthermore, we demonstrate that imperfect intersectoral labor mobility provides a better explanation for the sectoral comovement than an alternative model emphasizing the role of labor-supply wealth effects.",
keywords = "labor immobility, news shocks, nonseparable preferences, sectoral comovement, unanticipated shocks",
author = "Munechika Katayama and Kim, {Kwang Hwan}",
note = "Funding Information: We would like to thank the following people for their valuable comments and suggestions: Pablo Guerron-Quintana, Jinill Kim, Ryo Jinnai, Toshiaki Watanabe, and the seminar and conference participants at Yonsei University, the Bank of Japan, Kyoto University, Australian National University, Tohoku University, the 2011 Midwest Macroeconomics Meetings, the 2011 Asian Meetings of the Econometric Society, the 2011 annual meetings of the Southern Economic Association, the 2012 Spring Meeting of the Japanese Economic Association, and the International Conference “Frontiers in Macroeconometrics” at Hitotsubashi University. This paper was previously circulated as “Costly Labor Reallocation, NonSeparable Preferences, and Expectation Driven Business Cycles.” A part of this study was financially supported by JSPS Grants-in-Aid for Scientific Research 15K17020. Sang Heon Lee, JoonSeok Oh, and Minki Kim provided excellent research assistance. Publisher Copyright: {\textcopyright} 2018 The Ohio State University",
year = "2018",
month = feb,
day = "1",
doi = "10.1111/jmcb.12454",
language = "English",
volume = "50",
pages = "77--114",
journal = "Journal of Money, Credit and Banking",
issn = "0022-2879",
publisher = "Wiley-Blackwell",
number = "1",
}