Monopolistic Competition, Search Unemployment, and Macroeconomics

Thomas Ziesemer ()

No 21, Research Memorandum from Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT)

Abstract: The monopolistic competition model of Dixit and Stiglitz for the goodsmarket and the search unemployment model of Pissarides are combined ThePissarides part looses its Walrasian goods market and the Dixit-Stiglitz part looses itsWalrasian labour market. Pissarides’ results now also depend on the degree ofcompetition and in the Dixit-Stiglitz part the size and number of firms as well asaggregate output now also depend on aggregate hiring costs, tightness andunemployment, and real wages are not fixed. Some partial results of comparativestatic properties of the original models survive. New results concerning the effects ofchanges in labour (goods) market parameters on goods markets (the labour market)variables are obtained and compared to the literature on macroeconomic theory,empirical results and policy issues.

Keywords: macroeconomics (search for similar items in EconPapers)
Date: 2002
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