Recessionary shock and factor return in an underemployed economy

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.

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Year of publication:	2011
Authors:	Beladi, Hamid ; Mandal, Biswajit
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	International Trade \| General Equilibrium

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	D50 - General Equilibrium and Disequilibrium. General ; F11 - Neoclassical Models of Trade
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009323235