This paper contains a description of the production and labour demand sections of the BOF4 model. CES value added production functions are developed and estimated for the five sectors of the economy. From these the marginal product of labour and capital functions are derived which are important...

This paper describes the supply of labour and the determination of wages and prices in the BOF4 model. Labour supply is modelled as a function of real wage, income and discouraged worker effects. Wages are a functi on of the unemployment rate. Besides that they respond to the deviation of actual...