Substitution over Time in Work and Consumption

Posted: 6 Jul 2008

See all articles by Robert E. Hall

Robert E. Hall

Hoover Institution and Department of Economics, Stanford University; National Bureau of Economic Research (NBER)

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Date Written: July 6, 2008

Abstract

Sir John Hick's Value and Capital provided the theoretical foundation for an important element of modern macroeconomics. Intertemporal substitution - deferral or acceleration of economic activity in response to the real interest rate and other incentives - is the mechanism generally relied upon in equilibrium theories of macroeconomics to explain the irregular evolution of the economy over time. Even theorists who question the pure market-clearing paradigm are concerned with intertemporal substitution in measuring deadweight burden of fluctuations. This paper surveys recent empirical evidence on intertemporal substitution with regard to the type of fluctuations model introduced in Value and Capital.

Suggested Citation

Hall, Robert E., Substitution over Time in Work and Consumption (July 6, 2008). iHEA 2007 6th World Congress: Explorations in Health Economics Paper, Available at SSRN: https://ssrn.com/abstract=1155960

Robert E. Hall (Contact Author)

Hoover Institution and Department of Economics, Stanford University ( email )

Stanford, CA 94305-6010
United States
650-723-2215 (Phone)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States
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