Regional Adjustment Dynamics

Joachim Möller

No 26180, Discussion Paper Series from Hamburg Institute of International Economics

Abstract: The aim of the paper is to develop a theoretical framework for analyzing regional adjustment processes after idiosyncratic shocks. The model builds on the macroeconomic approach with monopolistic competition on goods and labor markets. It is shown how interregional factor mobility affects wage-setting behavior and labor supply. The dynamics of this extended model are explicitly taken into account. For a special case we can derive the characteristics of the adjustment process analytically. Under certain conditions the model exhibits hysteresis, i.e. temporary shocks on the price level or the unemployment rate can have a permanent effect on production and potential labor supply. It is argued that a suitable method for investigating regional adjustment processes empirically would be a panel VAR approach with integrated and co-integrated variables.

Keywords: Labor; and; Human; Capital (search for similar items in EconPapers)
Pages: 44
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://ageconsearch.umn.edu/record/26180/files/dp010146.pdf (application/pdf)

Related works:
Working Paper: Regional adjustment dynamics (2001)
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:ags:hwwadp:26180

DOI: 10.22004/ag.econ.26180

Access Statistics for this paper

More papers in Discussion Paper Series from Hamburg Institute of International Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().