A Real-Business-Cycle Model with Efficiency Wages and a Government Sector: The Case of Bulgaria

Aleksandar Vasilev

Central European Journal of Economic Modelling and Econometrics, 2017, vol. 9, issue 4, 359-377

Abstract: In this paper we investigate the quantitative importance of efficiency wages of no-shirking type in explaining business cycle fluctuations in Bulgarian labor markets. This is done by augmenting a relatively standard real business cycle model with unobservable workers effort by employers and efficiency wage contracts, as well as through the inclusion of a detailed government sector. This imperfection in labor markets introduces a strong internal transmission mechanism that allows the model framework to capture the business cycles in Bulgarian data better than earlier models, and setups assuming perfectly-competitive labor markets in particular.

Keywords: general equilibrium; shirking; efficiency wages; unemployment; Bulgaria (search for similar items in EconPapers)
JEL-codes: E24 E32 J41 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (44)

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Persistent link: https://EconPapers.repec.org/RePEc:psc:journl:v:9:y:2017:i:4:p:359-377

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