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Recessionary shock and factor return in an underemployed economy

Author

Listed:
  • Beladi, Hamid
  • Mandal, Biswajit

Abstract

This paper builds a general equilibrium model for a small open economy with unemployment of unskilled labor to assess the impact of a recessionary shock. It is shown that irrespective of the factor intensity assumption skilled wage and rental ratio goes up if recession led price fall is significant. However, when the price fall is not sufficiently big, factor intensity assumption becomes crucial for the eventual effect on factors’ return ration.

Suggested Citation

  • Beladi, Hamid & Mandal, Biswajit, 2011. "Recessionary shock and factor return in an underemployed economy," MPRA Paper 33733, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:33733
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    References listed on IDEAS

    as
    1. Biswajit Mandal, 2016. "Recessionary Shock, Capital Mobility and the Informal Sector," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(1), pages 149-162, March.
    2. Ronald W. Jones, 2018. "The Structure of Simple General Equilibrium Models," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 4, pages 61-84, World Scientific Publishing Co. Pte. Ltd..
    3. Marjit, Sugata & Kar, Saibal & Chaudhuri, Sarbajit, 2011. "Recession in the skilled sector and implications for informal wage," Research in Economics, Elsevier, vol. 65(3), pages 158-163, September.
    4. Chaudhuri, Sarbajit, 2009. "Economic Recession and Informal Sector Workers," MPRA Paper 18033, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    International Trade; General Equilibrium;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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