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Cointegration Tests of the Profit-maximising Equilibrium in Greek Manufacturing: 1958-91

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  • Theodore Lianos
  • Stilianos Fountas

Abstract

This paper applies the recently developed cointegration techniques to test for a long-run equilibrium among real wages and the average productivity of labour as implied by profit maximisation in the Greek manufacturing sector. We find evidence for a profit-maximising equilibrium and for adjustment towards this long-run equilibrium through nominal wages and labour productivity. We have also provided an estimate of the elasticity of substitution of 0.23 which is consistent with that of other studies using alternative approaches.

Suggested Citation

  • Theodore Lianos & Stilianos Fountas, 1997. "Cointegration Tests of the Profit-maximising Equilibrium in Greek Manufacturing: 1958-91," International Review of Applied Economics, Taylor & Francis Journals, vol. 11(3), pages 439-449.
    • Handle: RePEc:taf:irapec:v:11:y:1997:i:3:p:439-449
    DOI: 10.1080/02692179700000028
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    References listed on IDEAS

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    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    2. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    3. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    4. Quirino Paris & Theodore P. Lianos, 1974. "A neoclassical measure of labor exploitation in American agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 2(2), pages 235-254.
    5. Bewley, Ronald & Yang, Minxian, 1995. "Testing for cointegration: the effects of mis-specifying the lag length," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 39(3), pages 251-255.
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