This essay aims at presenting a dynamic macro-economic model which is micro-founded, in order to introduce in a more realistic way the labour market, by separating demand and supply, since their determinants are different: labour demand comes mainly from the maximizing bahaviour of firms, while labour supply is chosen by families on the basis (but not only) of the real wage rate. A number of computer simulations show that many different types of trajectories are possible, from a stationary state to regular growth, to both regular and damped business cycles.
Micro-founded macro-models and labour market / P.C. Nicola. - In: CHAOS, SOLITONS AND FRACTALS. - ISSN 0960-0779. - 29:3(2006), pp. 671-680. [10.1016/j.chaos.2005.08.098]
Micro-founded macro-models and labour market
P.C. NicolaPrimo
2006
Abstract
This essay aims at presenting a dynamic macro-economic model which is micro-founded, in order to introduce in a more realistic way the labour market, by separating demand and supply, since their determinants are different: labour demand comes mainly from the maximizing bahaviour of firms, while labour supply is chosen by families on the basis (but not only) of the real wage rate. A number of computer simulations show that many different types of trajectories are possible, from a stationary state to regular growth, to both regular and damped business cycles.
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