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Imperfect Competition, Capital Shortages and Unemployment Persistence

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  • Benassy, Jean-Pascal

Abstract

The author constructs a model integrating the traditions of imperfect competition macroeconomics and real business cycles. For this the author studies a dynamic economy with optimizing households, firms, and trade unions subject to stochastic shocks. The author can derive closed-form solutions for the behavior of all agents. It is found that the combination of capital shortages and imperfect competition in labor markets can give rise to unemployment and that this unemployment is quite persistent, even when the underlying shocks are not. Copyright 1997 by The editors of the Scandinavian Journal of Economics.

Suggested Citation

  • Benassy, Jean-Pascal, 1997. " Imperfect Competition, Capital Shortages and Unemployment Persistence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 15-27, March.
  • Handle: RePEc:bla:scandj:v:99:y:1997:i:1:p:15-27
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    Citations

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    Cited by:

    1. Forslund, Anders & Lindh, Thomas, 2004. "Decentralisation of bargaining and manufacturing employment: Sweden 1970-96," Working Paper Series 2004:3, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    2. Leo Kaas & Leopold von Thadden, 2003. "Unemployment, Factor Substitution and Capital Formation," German Economic Review, Verein für Socialpolitik, vol. 4, pages 475-495, November.
    3. José Ramón García & Valeri Sorolla, 2014. "Monopolistic Competition and Different Wage Setting Systems," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(1), pages 48-77, February.
    4. Malley, Jim & Moutos, Thomas, 2001. " Capital Accumulation and Unemployment: A Tale of Two "Continents."," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 79-99, March.
    5. Mongi Boughzala & Mokhtar Kouki, 2003. "Unemployment Persistence and The Informal Sector," Working Papers 0326, Economic Research Forum, revised 09 Nov 2003.
    6. Raurich, Xavier & Sorolla, Valeri, 2014. "Growth, unemployment and wage inertia," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 42-59.
    7. Xavier Raurich & Valeri Sorolla, 2008. "A General Framework for Growth Models with Non-Competitive Labor and Product Markets and Disequilibrium Unemployment," Working Papers 369, Barcelona Graduate School of Economics.
    8. Xavier Raurich (Universitat de Barcelona) & Valeri Sorolla (Universitat Autonoma de Barcelona), 2012. "Growth Models with Exogenous Saving Rates, Unemployment and Wage Inertia," Working Papers in Economics 287, Universitat de Barcelona. Espai de Recerca en Economia.
    9. Kevin x.d. Huang & Jie Chen & Zhe Li & Jianfei Sun, 2014. "Financial Conditions and Slow Recoveries," Vanderbilt University Department of Economics Working Papers 14-00004, Vanderbilt University Department of Economics.

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