Unemployment, growth and fiscal policy
Subtitle: new insights on the hysteresis hypothesis
By: by Xavier Raurich, Hector Sala, Valeri Sorolla.
Contributors: Sala, Hector.; Sorolla, Valeri.
Series: Discussion paper ;; no. 1127; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) ;; no. 1127
Publisher: IZA
Published: 2004
Place of publication: Bonn, Germany
Language: eng
Format: Electronic resource
Subjects: Economic development -- Mathematical models.; Unemployment -- Mathematical models.; Fiscal policy -- Mathematical models.; Hysteresis.
Description: "We develop a growth model with unemployment due to imperfections in the labor market. In this model, wage inertia and balanced budget rules cause a complementarity between capital and employment capable of explaining the existence of multiple equilibrium paths. Hysteresis is viewed as the result of a selection between these different equilibrium paths. We use this model to argue that, in contrast to the US, those fiscal policies followed by most of the European countries after the shocks of the 1970's may have played a central role in generating hysteresis"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 5/18/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.