Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099444 | Journal of Economic Dynamics and Control | 2008 | 18 Pages |
Abstract
We analyze whether different learning abilities of firms with respect to general equilibrium effects lead to different levels of unemployment. We consider a general equilibrium model, where firms in one sector compete à la Cournot and a real wage rigidity leads to unemployment. If firms consider only partial equilibrium effects when choosing quantities, the observation of general equilibrium feedback effects will lead to repeated quantity adjustments until a steady state is reached. When labor is mobile across industries, unemployment in the steady state is higher than when all general equilibrium effects are incorporated at once. The opposite result is true if labor is immobile.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Hans Gersbach, Achim Schniewind,