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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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    4. 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.
    5. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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