EconPapers    
Economics at your fingertips  
 

Economic development with public capital accumulation: The crucial role of wage flexibility on business cycles

Hiroki Murakami and Hiroaki Sasaki ()

Economic Modelling, 2020, vol. 93, issue C, 299-309

Abstract: The purpose of this paper is to study the effect of wage flexibility on economic development with public capital accumulation. For this purpose, we examine the stabilizing power of wage flexibility in a model of a small open economy with public capital. We then show that wage flexibility is conducive to economic stability. In particular, we find that there exists a threshold value in the degree of wage flexibility such that the stationary point is stable (resp. unstable) if the degree is greater (resp. less) than the threshold value, and that cyclical fluctuations arise when the degree is sufficiently close to the threshold value.

Keywords: Economic development; Economic stability; Public capital; Wage flexibility (search for similar items in EconPapers)
JEL-codes: H54 O11 O41 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999319315640
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:93:y:2020:i:c:p:299-309

DOI: 10.1016/j.econmod.2020.08.005

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-10-03
Handle: RePEc:eee:ecmode:v:93:y:2020:i:c:p:299-309