The Role of Real Wage Rigidity and Unemployment

Alfred Greiner and Bettina Fincke ()
Additional contact information
Bettina Fincke: Bielefeld University

Chapter Chapter 5 in Public Debt and Economic Growth, 2009, pp 111-127 from Springer

Abstract: Abstract In this chapter we present an endogenous growth model with public capital, public debt and where real wages are either flexible or rigid due to labor market imperfections. With flexible wages, a balanced budget scenario yields the highest balanced growth rate. Further, simulations suggest that there is a tradeoff between positive growth effects of deficit financed public investment and stability of the model. With real wage rigidities, a balanced budget scenario may yield a lower balanced growth rate compared to permanent public deficits. Further, the trade-off between growth effects of deficit financed investment and stability does not exist.

Keywords: Wage Rate; Real Wage; Public Investment; Labor Demand; Public Debt (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:dymchp:978-3-642-01745-2_5

Ordering information: This item can be ordered from
http://www.springer.com/9783642017452

DOI: 10.1007/978-3-642-01745-2_5

Access Statistics for this chapter

More chapters in Dynamic Modeling and Econometrics in Economics and Finance from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().