Since no political economy is possible if the aggregate supply function (AS) is vertical and since political economy is always standing, this paper shows some special kind of production functions which are required in order to get the horizontal section of the AS curve and some special kind of labor supply functions which are required too. The paper offers too some econometrics tests of these functions using cross-sections data from several countries (IMF 2004 sources).
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Find related papers by JEL classification: C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment