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Imperfect Competition, Capital Shortages and Unemployment Persistence
Author(s) -
Bénassy JeanPascal
Publication year - 1997
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00044
Subject(s) - economics , imperfect competition , unemployment , imperfect , competition (biology) , economic shortage , persistence (discontinuity) , capital (architecture) , construct (python library) , microeconomics , labour economics , macroeconomics , government (linguistics) , computer science , biology , history , ecology , linguistics , philosophy , programming language , geotechnical engineering , archaeology , engineering
We construct a model integrating the traditions of imperfect competition macroeconomics and real business cycles. For this we study a dynamic economy with optimizing households, firms and trade unions subject to stochastic shocks. We can derive closed form solutions for the behaviour of all agents. It is found that the combination of capital shortages and imperfect competition in labor markets can give rise to unemployment, and that this unemployment is quite persistent, even when the underlying shocks are not.