Medium-term Fluctuations and the 'Great Ratios' of Economic Growth
Research output: Working paper › Research
Evidence for the OECD countries show that the “great ratios”, such as the unemployment rate, factor shares, Tobin’s q and the investment-capital ratio, fluctuate significantly on medium-term frequencies of 10-40 years duration. To explain these medium-term fluctuations, we establish a macro-dynamic model where the q-theory of investment is combined with sluggish real-wage adjustment in the labour market. In this framework, responses to shocks show persistence and amplification. A high degree of real-wage rigidity combined with a low elasticity of factor substitution leads to damped internal oscillations and hump-shaped impulse-response functions
Original language | English |
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Place of Publication | Kbh. |
Publisher | Økonomisk institut, Københavns Universitet |
Number of pages | 47 |
Publication status | Published - 2013 |
Series | University of Copenhagen. Institute of Economics. Discussion Papers (Online) |
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Number | 16 |
Volume | 2013 |
ISSN | 1601-2461 |
Bibliographical note
JEL Classification: E3, G1, O4
- Faculty of Social Sciences - Medium-term cycles, Tobin’s q, real-wage Phillips curve, elasticity of factor substitution, endogenous oscillations
Research areas
ID: 98952992