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Working Paper

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.

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

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.