Unemployment and Capacity Under-Utilisation in a Tobin’s q Model
AbstractA dynamic contracting model with endogenous prices, wages and investment is presented. It accounts for capital and labour underutilization at steady state and displays various patterns of unemployment rate and capacity utilization rate co-movements as a function of demand and supply shocks. The main determining elements of unemployment are the unit cost of capital, the intensity of competition in the product market, the magnitude of uncertainty and union characteristics.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (REL - Recherches Economiques de Louvain) with number 1995041.
Date of creation: 01 Dec 1995
Date of revision:
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- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
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