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The Modigliani Puzzle Revisited: A Note

Author

Listed:
  • Margarita Katsimi
  • Gylfi Zoega

Abstract

We estimate the relationship between investment and unemployment in order to explore whether the medium-term relationship emphasized by Franco Modigliani survived the recent Great Recession. Our results indicate that the relationship held up, both employment and investment fell although the estimated coefficient of investment is slightly smaller when the period 2000-2015 is added to the 1960-2000 period.

Suggested Citation

  • Margarita Katsimi & Gylfi Zoega, 2017. "The Modigliani Puzzle Revisited: A Note," CESifo Working Paper Series 6833, CESifo.
    • Handle: RePEc:ces:ceswps:_6833
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    References listed on IDEAS

    as
    1. Florian Hoffmann & Thomas Lemieux, 2016. "Unemployment in the Great Recession: A Comparison of Germany, Canada, and the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 95-139.
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    3. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
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    5. Christopher A. Pissarides, 2002. "Company Start-Up Costs and Employment," CEP Discussion Papers dp0520, Centre for Economic Performance, LSE.
    6. Herbertsson, Tryggvi Thor & Zoega, Gylfi, 2002. "The Modigliani 'puzzle'," Economics Letters, Elsevier, vol. 76(3), pages 437-442, August.
    7. Smith, Ron & Zoega, Gylfi, 2007. "Global unemployment shocks," Economics Letters, Elsevier, vol. 94(3), pages 433-438, March.
    8. Hoon, Hian Teck & Phelps, Edmund S., 1997. "Growth, wealth and the natural rate: Is Europe's jobs crisis a growth crisis?," European Economic Review, Elsevier, vol. 41(3-5), pages 549-557, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Modigliani puzzle; investment; unemployment; Great Recession;
    All these keywords.

    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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