Cointegration Tests of the Profit-maximising Equilibrium in Greek Manufacturing 1958-1991

Theodore Lianos and Stilianos Fountas

No 14, Working Papers from National University of Ireland Galway, Department of Economics

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.

JEL-codes: D21 (search for similar items in EconPapers)
Date: 1997, Revised 1997
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Published in International Review of Applied Economics, Vol. 11, No. 3, 1997

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