<Articles>THE SLOW SPEED OF ADJUSTMENT IN A NATIONAL LABOR MARKET, AND ITS EFFECT ON THE TIME PATH OF WORLDWIDE GENERAL EQUILIBRIUM TRANSITION DYNAMICS : The Case of a Hypothetical Two-Country-Multi-sector Trading World
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In a hypothetical two-country trading world, I investigated the effects of a relatively slow speed of adjustment in a domestic labor market in a country (in relation to that in a domestic capital market in the same country) upon the adjusting paths of price and quantity variables in all other factor and commodity markets in both countries. The focus of this analysis was on the transition paths of price-quantity adjustments from arbitrarily given initial values to steady state values in a general equilibrium setting. In this model, there was no price rigidity. For example, wage rigidity due to some important national differences in labor market institutions was assumed as a slow adjustment of wage in a labor market. With this assumption, unemployment of labor in a slowly adjusting domestic labor market did not persist for long and gradually disappeared as the transitional adjustment mechanisms in the system further proceeded to the state of a worldwide general equilibrium. In order to conduct this computational experiment, I built a two-country-multi-sector general equilibrium trade model capable of producing the transition time paths of all relevant variables to the steady state equilibrium values under two different scenarios : (1) with no capital mobility and (2) with free capital mobility across national borders. The main result was that the relatively slow speed of adjustment in a national labor market prolonged the worldwide adjustments of all other labor and capital markets and consequently, commodity markets, regardless of the mobility of capital. The functioning of a seemingly isolated national labor market significantly affected the speed and time paths of the worldwide general equilibrium adjustments. This paper thus provides a plausible argument for initiating fundamental institutional reforms, along with the ongoing multilateral tariff reduction effort of recent years. These reforms would create a more wage-flexible national labor market needed to expedite globally interlinked market adjustment processes.
- 青森公立大学の論文
- 1999-09-30
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関連論文
- AN APPROACH TO CALIBRATING A GENERAL EQUILIBRIUM MODEL INCORPORATING AN INPUT-OUTPUT ACCOUNTING MATRIX
- THE SLOW SPEED OF ADJUSTMENT IN A NATIONAL LABOR MARKET, AND ITS EFFECT ON THE TIME PATH OF WORLDWIDE GENERAL EQUILIBRIUM TRANSITION DYNAMICS : The Case of a Hypothetical Two-Country-Multi-sector Trading World