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Product Market Competition, Investment and Employment-Abundant versus Job-Poor Growth: A Real Options Perspective

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  • Yu-Fu Chen
  • Michael Funke

Abstract

The role of product market reforms in achieving the objective of higher employment and growth has recently received much attention amongst academics. The aim of this paper is to analyse some of the channels through which cross-market effects come about and to assess their policy relevance. The analytic strategy of this paper relies upon the stochastic real options modelling approach. In a nutshell, our simulations using numerical methods indicate that comprehensive product market reforms would increase factor demand and growth significantly in the medium and long run.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1563.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1563

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Keywords: product market competition; regulation; real options; investment; employment;

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Cited by:
  1. Olaf Posch, 2007. "Structural estimation of jump-diffusion processes in macroeconomics," CREATES Research Papers 2007-23, School of Economics and Management, University of Aarhus.
  2. Michael Funke & Yu-Fu Chen, 2010. "Booms, recessions and financial turmoil: A fresh look at investment decisions under cyclical uncertainty," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 21007, Hamburg University, Department of Economics.
  3. Chen, Yu-Fu & Funke, Michael, 2009. "China's new Labour Contract Law: No harm to employment?," China Economic Review, Elsevier, Elsevier, vol. 20(3), pages 558-572, September.
  4. Yu-Fu Chen & Michael Funke, 2007. "Threshold Effects of Dismissal Protection Regulation and the Emergence of Temporary Work Agencies," Dundee Discussion Papers in Economics, Economic Studies, University of Dundee 207, Economic Studies, University of Dundee.
  5. Chen, Yu-Fu & Funke, Michael, 2008. "Threshold Effects of Dismissal Protection Regulation and the Emergence of Temporary Work Agencies," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2008-05, Scottish Institute for Research in Economics (SIRE).
  6. Chen, Yu-Fu & Funke, Michael, 2009. "Booms, Recessions and Financial Turmoil: A Fresh Look at Investment Decisions under Cyclical Uncertainty," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2009-31, Scottish Institute for Research in Economics (SIRE).
  7. Chen, Yu-Fu & Funke, Michael, 2008. "China´s new labour contract law: no harm to employment?," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2008-51, Scottish Institute for Research in Economics (SIRE).

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