IDEAS home Printed from https://ideas.repec.org/p/zbw/zewdip/5269.html
   My bibliography  Save this paper

Investment and employment adjustment after unification : some results from a macroeconometric disequilibrium model

Author

Listed:
  • Radowski, Daniel
  • Smolny, Werner
  • Winker, Peter

Abstract

The macroeconomic development in West Germany in the aftermath of unification was characterized by a boom period in 1990/1991, a deep recession in 1992/1993 and a slow recovery since then. In East Germany, in contrast, unification induced a breakdown of production and employment followed by a slow recovery starting in 1992. In this paper, a macroeconometric model is used to assess this development. In particular, estimation results for investment and employment adjustment after unification are reported. The estimates are based on a disequilibrium model formerly developed for West Germany and extended in this paper to cover also unified Germany. The results reveal that the adjustment of investment and employment can be analysed with the same theoretical model for West and East Germany. However, the adjustment speed for investment differs significantly at least in the early years after unification, while changes in the mismatch on the labour market and employment adjustment are less pronounced.

Suggested Citation

  • Radowski, Daniel & Smolny, Werner & Winker, Peter, 1999. "Investment and employment adjustment after unification : some results from a macroeconometric disequilibrium model," ZEW Discussion Papers 99-56, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5269
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/24338/1/dp5699.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    2. Robert J. Barro, 1972. "A Theory of Monopolistic Price Adjustment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 39(1), pages 17-26.
    3. Robert E. Hall, 1986. "Market Structure and Macroeconomic Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(2), pages 285-338.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Beck, Martin & Winker, Peter, 2004. "Modeling spillovers and feedback of international trade in a disequilibrium framework," Economic Modelling, Elsevier, vol. 21(3), pages 445-470, May.
    2. Winker, Peter & Smolny, Werner & Radowski, Daniel, 1999. "Modeling German unification in a disequilibrium framework," ZEW Discussion Papers 99-61, ZEW - Leibniz Centre for European Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Winker, Peter & Smolny, Werner & Radowski, Daniel, 1999. "Modeling German unification in a disequilibrium framework," ZEW Discussion Papers 99-61, ZEW - Leibniz Centre for European Economic Research.
    2. Carlos Borondo, 1994. "La rigidez nominal de los precios de la Nueva Economía Keynesiana: una panorámica," Investigaciones Economicas, Fundación SEPI, vol. 18(2), pages 245-288, May.
    3. Paolo Epifani & Gino Gancia, 2008. "The Skill Bias of World Trade," Economic Journal, Royal Economic Society, vol. 118(530), pages 927-960, July.
    4. Dotsey, Michael & King, Robert G., 2005. "Implications of state-dependent pricing for dynamic macroeconomic models," Journal of Monetary Economics, Elsevier, vol. 52(1), pages 213-242, January.
    5. Dionisio Dias Carneiro & Pedro Garcia Duarte, 2001. "Inércia de juros e regras de Taylor: Explorando as funções de resposta a impulso em um modelo de equilíbrio geral com parâmetros estilizados para o Brazil," Textos para discussão 450, Department of Economics PUC-Rio (Brazil).
    6. Mary Amiti & Oleg Itskhoki & Jozef Konings, 2016. "International Shocks and Domestic Prices: How Large Are Strategic Complementarities?," NBER Working Papers 22119, National Bureau of Economic Research, Inc.
    7. Jaimovich, Nir, 2007. "Firm dynamics and markup variations: Implications for sunspot equilibria and endogenous economic fluctuations," Journal of Economic Theory, Elsevier, vol. 137(1), pages 300-325, November.
    8. Smolny, Werner & Winker, Peter, 1999. "Employment adjustment and financing constraints : A theoretical and empirical analysis at the micro level," Discussion Papers 573, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    9. Luís F. Costa & Huw Dixon, 2009. "Fiscal Policy under Imperfect Competition: A Survey," Working Papers Department of Economics 2009/25, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    10. Russell Cooper & Andrew John, 2000. "Imperfect competition and macroeconomics : Theory and quantitative implications," Cahiers d'Économie Politique, Programme National Persée, vol. 37(1), pages 289-328.
    11. Greg Kaplan & Piotr Zoch, 2020. "Markups, Labor Market Inequality and the Nature of Work," Working Papers 2020-09, Becker Friedman Institute for Research In Economics.
    12. Menezes, Flavio M. & Quiggin, John, 2022. "Market power amplifies the price effects of demand shocks," Economics Letters, Elsevier, vol. 221(C).
    13. Noussair, C.N. & Pfajfar, D. & Zsiros, J., 2011. "Frictions, Persistence, and Central Bank Policy in an Experimental Dynamic Stochastic General Equilibrium Economy," Other publications TiSEM 1086a234-17a8-45d6-91d2-0, Tilburg University, School of Economics and Management.
    14. Jean-Pascal Bénassy, 2006. "Dynamic models with non clearing markets," Working Papers halshs-00590433, HAL.
    15. Farmer Roger E. A. & Guo Jang-Ting, 1994. "Real Business Cycles and the Animal Spirits Hypothesis," Journal of Economic Theory, Elsevier, vol. 63(1), pages 42-72, June.
    16. Jaimovich, Nir & Floetotto, Max, 2008. "Firm dynamics, markup variations, and the business cycle," Journal of Monetary Economics, Elsevier, vol. 55(7), pages 1238-1252, October.
    17. Saygın ŞAHİNÖZ & Bedri̇ye SARAÇOĞLU, 2008. "Price‐Setting Behavior In Turkish Industries: Evidence From Survey Data," The Developing Economies, Institute of Developing Economies, vol. 46(4), pages 363-385, December.
    18. Matthias Meier & Timo Reinelt, 2020. "Monetary Policy,Markup Dispersion, and Aggregate TFP," CRC TR 224 Discussion Paper Series crctr224_2020_161, University of Bonn and University of Mannheim, Germany.
    19. Mikhail Golosov & Robert E. Lucas Jr., 2007. "Menu Costs and Phillips Curves," Journal of Political Economy, University of Chicago Press, vol. 115, pages 171-199.
    20. Ronny Mazzocchi, 2013. "Scope and Flaws of the New Neoclassical Synthesis," DEM Discussion Papers 2013/13, Department of Economics and Management.

    More about this item

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:5269. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zemande.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.