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Unemployment and Capacity Under-Utilisation in a Tobin’s q Model

Published online by Cambridge University Press:  17 August 2016

David de La Croix
David de La Croix*
Affiliation:
FNRS & Université catholique de Louvain
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Summary

A dynamic contracting model with endogenous prices, wages and investment is presented. It accounts for capital and labour underutilization at steady state and displays various patterns of unemployment rate and capacity utilization rate co-movements as a function of demand and supply shocks. The main determining elements of unemployment are the unit cost of capital, the intensity of competition in the product market, the magnitude of uncertainty and union characteristics.

Résumé

Résumé

On présente un modèle dynamique de contrat efficient entre entreprises et syndicats où prix, salaires et investissements sont endogènes. Ce modèle rend compte de la sous-utilisation du travail et de l’équipement à l’état stationnaire et montre différents types de co-mouvements entre chômage et taux d’utilisation des capacités, en fonction de chocs de demande et d’offre. Les éléments essentiels qui déterminent le taux de chômage sont le coût unitaire du capital, le degré de concurrence sur le marché des biens, l’ampleur de l’incertitude et les caractéristiques des syndicats.

Keywords

E20E20.
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 61 , Issue 4 , 1995 , pp. 403 - 431
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1995 

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Footnotes

(*)

I am most grateful to Torben Andersen, Christian Arnsperger, Raouf Boucekkine, Jean-Bernard Chatelain, Philippe Devillé, Jacques Drèze, Horst Entorf, Jean-François Fagnart, Marcel Lever, Omar Licandro, Franz Palm, Henri Sneessens, to the participants to the seminars in Antwerp (UFSIA) and Maastricht (RL), to the participants to the Winter Meeting of the Econometric Society (London, 1993), to the participants to the SPES project CT91-0079 and to the two referees for their comments. This text presents research results of the Belgian programme on Interuniversity Poles of Attraction initiated by the Belgian State, Prime Minister’s office.

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