Resource title

Regional adjustment dynamics

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image for OpenScout resource :: Regional adjustment dynamics

Resource description

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.

Resource author

Joachim Möller

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/19405

Resource license

Adapt according to the presented license agreement and reference the original author.