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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 Hamburg University, Department of Economics in its series Quantitative Macroeconomics Working Papers with number 20802.

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Date of creation: Feb 2008
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Handle: RePEc:ham:qmwops:20802

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Keywords: Product market competition; Regulation; Real options; Investment; Employment;

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Cited by:
  1. Chen Yu-Fu & Funke Michael, 2009. "Threshold Effects of Dismissal Protection Regulation and the Emergence of Temporary Work Agencies," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 13(4), pages 1-29, September.
  2. Yu-Fu Chen & Michael Funke, 2009. "Booms, Recessions and Financial Turmoil: A Fresh Look at Investment Decisions under Cyclical Uncertainty," Dundee Discussion Papers in Economics 225, Economic Studies, University of Dundee.
  3. Chen, Yu-Fu & Funke, Michael, 2008. "China's new labour contract law: No harm to employment?," BOFIT Discussion Papers 29/2008, Bank of Finland, Institute for Economies in Transition.
  4. Posch, Olaf, 2009. "Structural estimation of jump-diffusion processes in macroeconomics," Journal of Econometrics, Elsevier, vol. 153(2), pages 196-210, December.

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