Real-business-cycle models usually use total factor productivity to explain how consumption, investment, and hours move together. However, recent evidence suggests that investment shocks also play a big role in economic ups and downs. A new study found that a model that considers differences in how employed and unemployed people consume and work can explain these movements when investment efficiency changes. The study shows that these differences explain most of the changes in consumption, investment, and work hours during economic cycles. This means that the difference in labor supply between employed and unemployed people is not a big factor in how the economy moves over time.