Year: 2017
Author: Christodoulakis, Nicos, Axioglou, Christos
Applied Economics Quarterly, Vol. 63 (2017), Iss. 1 : pp. 49–80
Abstract
An alarming legacy of the austerity programs in the euro area is the vast disinvestment that has taken place over the recent years, and especially so in the peripheral economies. Unless it is quickly reversed, disinvestment not only hinders long-term growth but also undermines the prospects of a gradual reduction of unemployment and risks further imbalances in, and threats to, the monetary union. Combining a neoclassical Diamond model with labour market imperfections, the paper shows that unemployment is a function of capital investment under either CES or Cobb-Douglas production functions. A cross-section estimate for the euro area economies confirms the theoretical findings.
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Journal Article Details
Publisher Name: Global Science Press
Language: English
DOI: https://doi.org/10.3790/aeq.63.1.49
Applied Economics Quarterly, Vol. 63 (2017), Iss. 1 : pp. 49–80
Published online: 2017-03
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 32
Keywords: euro area investment unemployment capital-labour substitution production function E22 E24
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