IDEAS home Printed from https://ideas.repec.org/p/ris/giamwp/2010_001.html
   My bibliography  Save this paper

Animal Spirits and Investment Complementarities in a Temporary Equilibrium model with Underemployment

Author

Listed:

Abstract

This paper proposes a sequential macroeconomic model to study investment complementarities in the presence of un(der)employment. It also incorporates some assumptions generally used in Keynesian economics like animal spirits, cash-in-advance constraints and irreversibility of investment decisions. The construction of the model puts special emphasis on the role of investment decisions in the formation of business cycles.Our results provide support to the view that wage flexibility does not promise neither to dampen expectation-driven economic fluctuations nor to shorten the adjustment period. In the fix-price equilibrium, there appears a trade-of between unemployment and output volatility. When the wage formation is less sensitive to changes in past level of unemployment, less pronounced, the output volatility and more pronounced the unemployment volatility

Suggested Citation

  • Polat, Sezgin, 2010. "Animal Spirits and Investment Complementarities in a Temporary Equilibrium model with Underemployment," GIAM Working Papers 10-1, Galatasaray University Economic Research Center, revised 2010.
    • Handle: RePEc:ris:giamwp:2010_001
    as

    Download full text from publisher

    File URL: http://giam.gsu.edu.tr/wp-content/uploads/2014/07/WP-10-01.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Complementarites; Animal Spirits; Sequential Model; Fluctuations;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

    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:ris:giamwp:2010_001. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Renginar Senses Dayangac (email available below). General contact details of provider: https://edirc.repec.org/data/giamgtr.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.