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Home Production Meets Time-To-Build

An innovation in this paper is to introduce a time-to-build technology for the production of market capital into a model with home production. The paper’s main finding is that the two anomalies that have plagued all household production models-the positive correlation between business and household investment, and household investment leading business investment over the business cycle-are resolved when time-to-build is added.

Suggested citation: Gomme, Paul, Finn Kydland and Peter Rupert, 2000. “Home Production Meets Time-To-Build,” Federal Reserve Bank of Cleveland, Working Paper, no. 00-07R.

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