Cointegration Tests of the Profit-maximising Equilibrium in Greek Manufacturing: 1958-91

Theodore Lianos and Stilianos Fountas

International Review of Applied Economics, 1997, vol. 11, issue 3, 439-449

Abstract: This paper applies the recently developed cointegration techniques to test for a long-run equilibrium among real wages and the average productivity of labour as implied by profit maximisation in the Greek manufacturing sector. We find evidence for a profit-maximising equilibrium and for adjustment towards this long-run equilibrium through nominal wages and labour productivity. We have also provided an estimate of the elasticity of substitution of 0.23 which is consistent with that of other studies using alternative approaches.

Date: 1997
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DOI: 10.1080/02692179700000028

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