Flexibility, Investment and Growth

Giuseppe Bertola

No 422, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper proposes a model of endogenous growth with diversifiable uncertainty, irreversible investment decisions and imperfect labour mobility. Obstacles to labour reallocation lower the operating profits earned by existing firms and increase the cost of creating new ones, thus reducing investment, growth and welfare in decentralized equilibrium. The model's macroeconomic framework is appropriate for a study of labour contracts, of capital- and labour-market imperfections, and of industrial policy.

Keywords: Efficient Allocation; Flexibility; Growth; Idiosyncratic Shocks; Job Security (search for similar items in EconPapers)
Date: 1990-06
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Flexibility, investment, and growth (1994)
Working Paper: Flexibility, Investment, and Growth (1991)
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