Smolny Dynamic Factor Demand in a Rationing Context

Theory and Estimation of a Macroeconomic Disequilibrium Model for the Federal Republic of Germany
1993
ISBN: 978-3-642-51512-5
Verlag: Springer
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 242 Seiten, eBook

Reihe: Studies in Contemporary Economics

A macroeconomic disequilibrium model is developed for the
Federal Republic of Germany. Starting with a microeconomic
model of firm's behaviour, the optimal dynamic adjustment of
employment and investment is derived. The model of the firm
is complemented by an explicite aggregation procedure which
allows to derive macroeconomic relations. The model is
estimated with macroeconomic data for the Federal Republic
of Germany.
An important feature is the consistent introduction of
dynamic adjustment into a model of the firm. A new method is
the particular approach of a delayed adjustment of
employment and investment.
The estimation results show significant underutilizations of
labour and capital and indicate the importance of supply
constraints for imports and exports. As the most prominent
result, they reveal the importance of the slow adjustment of
employment and investment for the macroeconomic situation in
Germany and especially for the persistence of high
unemployment in the eighties.

Zielgruppe

Research

Autoren/Hrsg.

Smolny, Werner

Inhaltsverzeichnis

I Theory.- 1 Disequilibrium models.- 1.1 Recent developments in Keynesian macroeconomics.- 1.2 Microfoundations of wage and price rigidity.- 1.2.1 The rigidity of prices.- 1.2.2 The stickiness of wages.- 1.2.3 Theories of wage and price change.- 1.3 Fix-price models.- 1.4 Dynamic factor demand.- 1.4.1 Theoretical and empirical work on adjustment costs.- 1.4.2 Specification of adjustment costs.- 1.4.3 The role of time for adjustment.- 2 The basic model.- 2.1 Assumptions.- 2.1.1 Wages, prices, and capital costs.- 2.1.2 The concept of micro-markets.- 2.1.3 The dynamic decision structure.- 2.2 The optimization program of the firm.- 2.2.1 Output.- 2.2.2 Employment.- 2.2.3 The investment decision.- 2.2.3.1 The optimal capital stock.- 2.2.3.2 The derivation of the optimal capital-labour ratio.- 2.3 Regimes on the goods and labour market.- 2.4 Appendix A.- 2.5 Appendix B: list of symbols.- 3 Extensions of the basic model.- 3.1 Overtime working.- 3.2 Dynamic input adjustment.- 3.2.1 Dynamic adjustment of employment.- 3.2.2 Investment and capital-labour substitution.- 3.3 Endogenous wages and prices.- 4 The aggregation of micro-markets.- 4.1 The distribution of micro-markets.- 4.2 Derivation of the CES-property.- 4.3 The quality of the CES-approximation.- II Empirical estimation.- 5 Specification of the model.- 5.1 The recursive structure.- 5.2 The treatment of expectations.- 5.3 The choice of technique.- 5.4 Calculation of demand — the trade equations.- 5.5 Estimation of the minimum conditions.- 5.5.1 Determination of output.- 5.5.2 Labour demand and employment.- 5.6 The demand for capital.- 5.7 Appendix C: data sources and definitions.- 6 Results.- 6.1 Capital-labour substitution.- 6.2 Trade.- 6.3 Output and overtime working.- 6.4 Employment.- 6.5 Capital formation.- Conclusion.