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Demand Uncertainty and Labour Input in a Bivariate ARCH-M Model


  • Gebhard FLAIG

    (Universität Augsburg)


This paper analyses the impact of input uncertainty on labour demand. An ARCH-M model is incorporated into an error-correction framework which allows to model both short- and long-run labour demand. The conditional variance of unexpected output changes serves as a proxy for demand uncertainty. The output and employment equations are estimated simultaneously for the West-German manufacturing sector.

Suggested Citation

  • Gebhard FLAIG, 1992. "Demand Uncertainty and Labour Input in a Bivariate ARCH-M Model," Discussion Papers (REL - Recherches Economiques de Louvain) 1992031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvre:1992031

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