The co-movements of labor productivity with output, total hours, vacancies and unemployment have changed since the mid 1980s This paper offers an explanation for the sharp break in the fl uctuations of labor market variables based on endogenous labor supply decisions following the mortgage market deregulation Our exercise shows that the dynamic pattern of the labor market variables might have been substantially affected by the increase in household leverage in the US in the last twenty years We set up a search model with effi cient bargaining and fi nancial frictions, in which impatient borrowers can take an amount of credit that cannot exceed a proportion of the expected value of their real estate holdings When borrowers’ equity requirements are low, the impact of a positive technology shock on the marginal utility of consumption is strengthened, which in turn results in lower hours per worker and higher wages in the bargaining process This shift in labor supply discourages fi rms from opening vacancies, reducing the impact of the shock on employment

Household debt and labour market fluctuations

The article aims at determining factors influencing on Consumer Instalment Credit (CIC) with the case of Vietnam. Primary data from in-depth interview and sample of 580 from respondents surveyed from September to December of 2018 showed that education level, interest rates; income, age of customer have strong impacts on the growth of CIC in emerging country. From these findings, recommendations for authority agencies and banks were proposed to develop CIC in transitional country.

http://ijssei.in/index.php/ijssei/article/download/114/71

Determinants of Consumer Instalment Credit in Transitional Country: The case of Vietnam

This paper demonstrates that, in a standard RBC model, internal consumption habits alone are sufficient to generate positive comovements among key macroeconomic aggregates in response to news about future productivity. We highlight the prospective channel associated with internal habits, through which the effect of news shocks is transmitted to the present, stimulating current consumption, labor, and investment. Without this channel, other forms of preferences such as external habits fail to generate the positive comovements. The quantitative performance of the model is also discussed. Arguably, we provide a nearly minimal departure from the RBC framework to generate expectation-driven business cycles. 

Habit Formation and News-Driven Business Cycles

This paper demonstrates that, in a standard RBC model, internal consumption habits alone are sufficient to generate positive comovements among key macroeconomic aggregates in response to good news about future productivity. We highlight the prospective channel associated with internal habits, through which the effect of news shocks is transmitted to the present, stimulating current consumption, labor, and investment. Without this channel, other forms of preferences such as external habits fail to generate the positive comovements. The quantitative performance of the model is also discussed. Arguably, we provide a nearly minimal departure from the RBC framework to generate expectation-driven business cycles. 

Do fluctuations of the labor wedge, defined as the gap between the firm's marginal product of labor (MPN) and the household's marginal rate of substitution (MRS), reflect fluctuations of the gap between the MPN and the real wage or fluctuations of the gap between the real wage and the MRS? For many countries and most forcefully for the United States, fluctuations of the labor wedge predominantly reflect fluctuations of the gap between the real wage and the MRS. As a result, business cycle theories of the labor wedge should primarily focus on improving the household side of the labor market. Explanations of the labor wedge based on departures of the representative firm's MPN from the real wage are rejected by the data because the labor share of income is not strongly procyclical.

The Labor Wedge: MRS vs. MPN

In this study, the relation between consumer credit and real economic activity during the Great Moderation is studied in a dynamic stochastic general equilibrium model. Our model economy is populated by two different household types. Investors, who hold the economy’s capital stock, own the firms and supply credit, and workers, who supply labor and demand credit to finance consumption. Furthermore, workers seek to minimize the difference between investors’ and their own consumption level. Qualitatively, an income redistribution from labor to capital leads to consumer credit dynamics that are in line with the data. As a validation exercise, we simulate a three-shock version of the model and find that our theoretical set-up is able to reproduce important business cycle correlations.

/pdf/income-redistribution-consumer-credit-and-keeping-up-with-1yo9h4zyat.pdf

Income Redistribution, Consumer Credit, and Keeping Up with the Riches

In this study, we set up a dynamic stochastic general equilibrium (DSGE) model with upward looking consumption comparison and show that consumption externalities are an important driver of consumer credit dynamics. Our model economy is populated by two different household types. Investors, who hold the economy's capital stock, own the firms and supply credit, and workers, who supply labor and demand credit to finance consumption. Furthermore, workers condition their consumption choice on the investors' level of consumption. We estimate the model and find a significant keeping up mechanism by matching business cycle statistics. In reproducing credit moments, our proposed model significantly outperforms a model version in which we abstract from consumption externalities.

/pdf/income-redistribution-consumer-credit-and-keeping-up-with-112h8ybb09.pdf

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Income Redistribution, Consumer Credit, and Keeping Up with the Riches

Income Redistribution, Consumer Credit, and Keeping Up with the Riches