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

Listed author(s):
  • 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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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
Handle: RePEc:bge:wpaper:369
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  1. Bentolila Samuel & Saint-Paul Gilles, 2003. "Explaining Movements in the Labor Share," The B.E. Journal of Macroeconomics, De Gruyter, vol. 3(1), pages 1-33, October.
  2. Valeri Sorolla-i-Amat, "undated". "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).
  3. Francesco Daveri & Marco Maffezzoli, 2000. "A numerical approach to fiscal policy, unemployment, and growth in Europe," Macroeconomics 0004010, EconWPA.
  4. Benassy, Jean-Pascal, 1997. " Imperfect Competition, Capital Shortages and Unemployment Persistence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 15-27, March.
  5. Xavier Raurich & Hector Sala Lorda & Valeri Sorolla, 2004. "Unemployment, growth and fiscal policy: new insights on the hysteresis hypothesis," Working Papers wpdea0404, Department of Applied Economics at Universitat Autonoma of Barcelona.
  6. Jordi GalÎ, 1996. "Multiple equilibria in a growth model with monopolistic competition (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 251-266.
  7. Croix,David,de la & Palm,Franz & Urbain,Jean-Pierre, 1996. "Labor market dynamics when effort depends on wage growth comparisons," Research Memorandum 016, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  8. C Bean & Christopher A. Pissarides, 1992. "Unemployment, Consumption and Growth," CEP Discussion Papers dp0100, Centre for Economic Performance, LSE.
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  11. Kaas, Leo & von Thadden, Leopold, 2001. "Unemployment, Factor Substitution, and Capital Formation," Discussion Paper Series 1: Economic Studies 2001,01, Deutsche Bundesbank, Research Centre.
  12. Lawrence F. Katz & Olivier Blanchard, 1999. "Wage Dynamics: Reconciling Theory and Evidence," American Economic Review, American Economic Association, vol. 89(2), pages 69-74, May.
  13. Joao Gomes & Jeremy Greenwood & Sergio Rebelo, 1997. "Equilibrium Unemployment," NBER Working Papers 5922, National Bureau of Economic Research, Inc.
  14. Danthine, Jean-Pierre & Kurmann, Andre, 2002. "Fair Wages in a New Keynesian Model of the Business Cycle," CEPR Discussion Papers 3423, C.E.P.R. Discussion Papers.
  15. Simon Anderson & Michael Devereux, 1985. "Trade Unions and the Choice of Capital Stock," Working Papers 600, Queen's University, Department of Economics.
  16. Robert J. Barro & Xavier Sala-i-Martin, 2003. "Economic Growth, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262025531, September.
  17. Hogan, Vincent, 2004. "Wage aspirations and unemployment persistence," Journal of Monetary Economics, Elsevier, vol. 51(8), pages 1623-1643, November.
  18. Marco Maffezzoli, 2000. "Non-Walrasian Labor Markets and Real Business Cycles," Macroeconomics 0004009, EconWPA.
  19. 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.
  20. Xavier Raurich & Valeri Sorolla, "undated". "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).
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