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A General Framework for Growth Models with Non-Competitive Labor and Product Markets and Disequilibrium Unemployment

  • Xavier Raurich
  • Valeri Sorolla

In this paper we derive the general framework for growth models with non competitive labor and output markets and disequilibrium unemployment. For the three standard ways of generating savings, the framework makes clear how capital growth depends on employment and employment on the stock of capital and how both variables depend on the real wage and the markup. Then we analyze the long run relationship between growth and unemployment for some standard wage setting rules: constant real wages, rules that imply a constant unemployment rate and rules with inertia on wages and labor incomes, paying special attention to the neoclassical production function with in…finite horizon consumers, the Ramsey model (the canonical model of growth) with unemployment.

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File URL: http://research.barcelonagse.eu/tmp/working_papers/369.pdf
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Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 369.

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Date of creation: Dec 2008
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Handle: RePEc:bge:wpaper:369
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  1. Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
  2. Vincent Hogan, 2003. "Wage Aspirations and Unemployment Persistence," Working Papers 200310, School Of Economics, University College Dublin.
  3. Marco Maffezzoli, . "Non-Walrasian Labor Markets and Real Business Cycles," Working Papers 167, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. Francesco Daveri & Marco Maffezzoli, 2000. "A numerical approach to fiscal policy, unemployment, and growth in Europe," Macroeconomics 0004010, EconWPA.
  5. de la Croix, David & Palm, Franz & Urbain, Jean-Pierre, 1996. "Labor market dynamics when effort depends on wage growth comparisons," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1996019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Sep 1996.
  6. Xavier Raurich & Valeri Sorolla, . "Unemployment and Wage Formation in a Growth Model with Public Capital," UFAE and IAE Working Papers 508.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  7. Gali, Jordi, 1996. "Multiple Equilibria in a Growth Model with Monopolistic Competition," Economic Theory, Springer, vol. 8(2), pages 251-66, August.
  8. Doménech, Rafael & Garcí­a, José Ramón, 2008. "Unemployment, taxation and public expenditure in OECD economies," European Journal of Political Economy, Elsevier, vol. 24(1), pages 202-217, March.
  9. Olivier Jean Blanchard & Lawrence Katz, 1999. "Wage Dynamics: Reconciling Theory and Evidence," NBER Working Papers 6924, National Bureau of Economic Research, Inc.
  10. Valeri Sorolla-i-Amat, . "Growth, Unemployment And The Wage Setting Process," UFAE and IAE Working Papers 458.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  11. Leo Kaas & Leopold von Thadden, 2001. "Unemployment, Factor Substitution, and Capital Formation," Vienna Economics Papers 0102, University of Vienna, Department of Economics.
  12. Joao Gomes & Jeremy Greenwood & Sergio T. Rebelo, 2001. "Equilibrium Unemployment," RCER Working Papers 479, University of Rochester - Center for Economic Research (RCER).
  13. Collard, Fabrice & de la Croix, David, 1996. "Gift exchange and the business cycle: the fair wage strikes back," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1997008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Apr 1997.
  14. Jean-Pierre Danthine & André Kurmann, 2003. "Fair Wages in a New Keynesian Model of the Business Cycle," Cahiers de recherche 0320, CIRPEE.
  15. Bentollia, S. & Saint-Paul, G., 1999. "Explaining Movements in the Labor Share," Papers 9905, Centro de Estudios Monetarios Y Financieros-.
  16. Anderson, Simon P & Devereux, Michael, 1988. " Trade Unions and the Choice of Capital Stock," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(1), pages 27-44.
  17. Robert J. Barro & Xavier Sala-i-Martin, 2003. "Economic Growth, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262025531, June.
  18. Raurich, Xavier & Sala, Hector & Sorolla, Valeri, 2006. "Unemployment, Growth, And Fiscal Policy: New Insights On The Hysteresis Hypothesis," Macroeconomic Dynamics, Cambridge University Press, vol. 10(03), pages 285-316, June.
  19. Benassy, Jean-Pascal, 1997. " Imperfect Competition, Capital Shortages and Unemployment Persistence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 15-27, March.
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