IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/1005.html
   My bibliography  Save this paper

Profitability, Employment and Structural Adjustment in France

Author

Listed:
  • Pentti J.K. Kouri
  • Jorge Braga de Macedo
  • Albert J. Viscio

Abstract

In this paper, we present a dynamic model which explains output, enployment and energy consumption in the French manufacturing sector in terms of the expectedand actual path of wage rates and energy prices in units of output. The modelhas two distinguishing features: First, the rate of capacity utilization isdetermined explicitly from profit-maximizing behavior and it is viewed as the crucial adjusting variable in the short run. Second, we assume complete lack of substitutability between capital, labor and energy inputs ex post.The model is motivated by a brief discussion of French growth, focusing on the decline of profitability and employment in manufacturing, and simulated using annual data from 1950 to 1979. The wage explosion and the energy shock of the early seventies are interpreted (in a model allowing for overhead labor) in terms of changes in expected real factor prices,and their effects on the utilizationand the profitability of each vintage are quantified. Aggregating over vintages,the model generates the observed decline in profitability and utilization of existing capacity. The results of the simulation are very encouraging, and a simultaneous estimation of the model under static expectations is rejected by the data. There are two limitations of the analysis which will be relaxed in further work. Investment is exogenous and open-economy aspects only appear indirectly, say via constraints on the energy price and the price of output.

Suggested Citation

  • Pentti J.K. Kouri & Jorge Braga de Macedo & Albert J. Viscio, 1982. "Profitability, Employment and Structural Adjustment in France," NBER Working Papers 1005, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:1005
    Note: ITI IFM
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w1005.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anderson, G J, 1981. "A New Approach to the Empirical Investigation of Investment Expenditures," Economic Journal, Royal Economic Society, vol. 91(361), pages 88-103, March.
    2. Anna J. Schwartz, 1987. "Secular Price Change in Historical Perspective," NBER Chapters, in: Money in Historical Perspective, pages 78-109, National Bureau of Economic Research, Inc.
    3. Zvi Griliches, 1998. "Comparing Productivity Growth: An Exploration of French and U.S. Industrial and Firm Data," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 157-186, National Bureau of Economic Research, Inc.
    4. R. M. Solow & J. Tobin & C. C. Weizsäcker & M. Yaari, 1971. "Neoclassical Growth with Fixed Factor Proportions," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 9, pages 68-102, Palgrave Macmillan.
    5. Winston, Gordon C, 1977. "Capacity: An Integrated Micro and Macro Analysis," American Economic Review, American Economic Association, vol. 67(1), pages 418-422, February.
    6. Bean, Charles R, 1981. "An Econometric Model of Manufacturing Investment in the UK," Economic Journal, Royal Economic Society, vol. 91(361), pages 106-121, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gilad D. Aharonovitz & Nathan Skuza & Faysal Fahs, 2009. "Can Integrity Replace Institutions? Theory and Evidence," CESifo Working Paper Series 2730, CESifo.
    2. Helliwell, John F. & Sturm, Peter H. & Salou, Gerard, 1985. "International comparison of the sources of productivity slowdown 1973-1982," European Economic Review, Elsevier, vol. 28(1-2), pages 157-191.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stephen Bond & Dietmar Harhoff & John Van Reenen, 2010. "Investment, R&D and Financial Constraints in Britain and Germany," NBER Chapters, in: Contributions in Memory of Zvi Griliches, pages 433-460, National Bureau of Economic Research, Inc.
    2. Linna Lu & Yalin Lei, 2013. "Scale Determinants of Fiscal Investment in Geological Exploration: Evidence from China," PLOS ONE, Public Library of Science, vol. 8(10), pages 1-7, October.
    3. Cuthbertson, K. & Gasparro, D., 1995. "Fixed investment decisions in UK manufacturing: The importance of Tobin's Q, output and debt," European Economic Review, Elsevier, vol. 39(5), pages 919-941, May.
    4. Palle S. Andersen, 1987. "Profit shares, investment and output capacity," BIS Working Papers 12, Bank for International Settlements.
    5. Shafik, Nemat, 1990. "Modeling investment behavior in developing countries : an application to Egypt," Policy Research Working Paper Series 452, The World Bank.
    6. Boucekkine, Raouf & del Rio, Fernando & Licandro, Omar, 2005. "Obsolescence and modernization in the growth process," Journal of Development Economics, Elsevier, vol. 77(1), pages 153-171, June.
    7. Alhassan Abdul-Wakeel Karakara & Evans Osabuohien, 2020. "ICT adoption, competition and innovation of informal firms in West Africa: a comparative study of Ghana and Nigeria," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing Limited, vol. 14(3), pages 397-414, June.
    8. Elie Sadigh, 1996. "Endogenous growth and neoclassical school [Croissance endogène et école néoclassique]," Working Papers hal-01526907, HAL.
    9. Baker, Jessica & Carreras, Oriol & Kirby, Simon & Meaning, Jack & Piggott, Rebecca, 2016. "Modelling events: The short-term economic impact of leaving the EU," Economic Modelling, Elsevier, vol. 58(C), pages 339-350.
    10. Lorenz, Steffi, 2015. "Diversität und Verbundenheit der unternehmerischen Wissensbasis: Ein neuartiger Messansatz mit Indikatoren aus Innovationsprojekten," Discussion Papers on Strategy and Innovation 15-01, Philipps-University Marburg, Department of Technology and Innovation Management (TIM).
    11. AZOMAHOU, Théophile & BOUCEKKINE, Raouf & NGUYEN-VAN, Phu, 2009. "Promoting clean technologies under imperfect competition," LIDAM Discussion Papers CORE 2009011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    12. Kancs, d’Artis & Siliverstovs, Boriss, 2016. "R&D and non-linear productivity growth," Research Policy, Elsevier, vol. 45(3), pages 634-646.
    13. Fabrice Collard & Omar Licandro, 2020. "The neoclassical model and the welfare costs of selection," Discussion Papers 2020/03, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    14. Gary Ferrier & Hervé Leleu & Vivian Valdmanis, 2009. "Hospital capacity in large urban areas: is there enough in times of need?," Journal of Productivity Analysis, Springer, vol. 32(2), pages 103-117, October.
    15. Ortega-Argilés, Raquel & Piva, Mariacristina & Vivarelli, Marco, 2011. "Productivity Gains from R&D Investment: Are High-Tech Sectors Still Ahead?," IZA Discussion Papers 5975, Institute of Labor Economics (IZA).
    16. Yu. Yatsenko & N. Hritonenko, 2007. "Network economics and optimal replacement of age-structured IT capital," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 65(3), pages 483-497, June.
    17. Jacques Mairesse & Mohamed Sassenou, 1989. "Les facteurs qualitatifs de la productivité : un essai d'évaluation," Économie et Prévision, Programme National Persée, vol. 91(5), pages 35-42.
    18. Zvi Griliches, 1998. "Productivity, R&D, and Basic Research at the Firm Level in the 1970s," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 82-99, National Bureau of Economic Research, Inc.
    19. Joseph P. Byrne & E. Philip Davis, 2005. "Investment and Uncertainty in the G7," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(1), pages 1-32, April.
    20. McAleer, Michael, 1995. "The significance of testing empirical non-nested models," Journal of Econometrics, Elsevier, vol. 67(1), pages 149-171, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1005. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.