MACROECONOMIC FLUCTUATIONS AND THE ALLOCATION OF TIME

What are the fundamental driving forces of macroeconomic fluctuations? In particular, why do people spend more time working in booms and les s in recessions? These are basic questions of macroeconomics. Recent t hinking has emphasized technology shifts, preference shifts, and chang es in government purchases as likely driving forces. It is useful to d istinguish atemporal and intertemporal effects of the driving forces. Under standard assumptions, the technology shift has no effect through atemporal channels because income and substitution effects exactly of fset. A straightforward decomposition of movements of employment attri butes most of them to the atemporal effects of preference shifts.