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Prices, productivity and irregular cycles in a walrasian labour market

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  • Luciano Fanti

Abstract

A standard Cobb Douglas labour market model is used to examine the role of changes in prices and productivity on the stability. It is shown that in this walrasian labour market deterministic endogenous economic fluctuations, which are seemingly stochastic, emerge. Therefore it may be argued that the controversial - in empirical as well as theoretical recent literature - co-movement between variables does not necessarily ground on stochastic shocks on prices and technology as retained in the prevailing business cycle theory. In particular, we show that negative shocks on prices and productivity are always destabilising and trigger robust chaotic fluctuations.

Suggested Citation

  • Luciano Fanti, 2012. "Prices, productivity and irregular cycles in a walrasian labour market," Discussion Papers 2012/152, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    • Handle: RePEc:pie:dsedps:2012/152
    Note: ISSN 2039-1854
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    File URL: https://www.ec.unipi.it/documents/Ricerca/papers/2012-152.pdf
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    References listed on IDEAS

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    Cited by:

    1. Luciano Fanti, 2015. "Environmental Standards and Cournot Duopoly: A Stability Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(4), pages 577-593, August.

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