ICT as Technical Change in the Matching and Production Functions of a Pissarides-Dixit-Stiglitz model
AbstractIn this paper we integrate two workhorse models in economics: The monopolistic competition model of Dixit and Stiglitz and the search unemployment model of Pissarides. Information and communication technology (ICT) is interpreted as i) technical progress in the matching function of the Pissarides labour market search model where it is increasing the probability of filling a vacancy, and ii) as technical change in the production function of the Dixit-Stiglitz goods market model where it is increasing fixed costs and decreasing variable costs. All effects together, modelled as a permanent once-and-for-all ICT shock, increase the vacancy/ unemployment ratio, decrease the long-run equilibrium unemployment rate, and increase wages.
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Bibliographic InfoPaper provided by Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology in its series Research Memoranda with number 024.
Date of creation: 2001
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economics of technology ;
Other versions of this item:
- Ziesemer,Thomas, 2002. "ICT as Technical Change in the Matching and Production Functions of a Pissarides-Dixit-Stiglitz model," Research Memoranda 022, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology.
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