This paper explores the effects of incomplete markets and positive spillovers on aggregate and industry output behavior. We consider an economy composed of a fixed set of infinitely-lived industries. When industries coordinate production decisions they jointly improve their productivity. Markets...

Relative wages have been remarkably rigid for the last two decades in Danish manufacturing despite large shifts in relative employment from unskilled labor towards skilled and educated labor. Assuming capital-skill complementarity and fixed relative wages as a consequence of labor market...

This paper uses information from a rich firm-level survey on wage and price-setting procedures, in around 15,000 firms in 15 European Union countries, to investigate the relative importance of internal versus external factors in the setting of wages of newly hired workers. The evidence...

This paper examines the ability of alternative classes of growth models to explain the historical experience of the U.S. economy. The potential returns to the U.S. from raising its investment rate in terms of both the level and growth rate of future output are then quantified. The long-run...

The Okun law for Andalusia and Spain is estimated using quarterly data (1984-2000). We take a VAR approach that allows us to unveil the different dynamic behaviour of the relationship between the output gap and the unemployment gap in the two economies, as well as the asymmetric nature of that...

Business cycle synchronization represents a condition for the successful implementation of the common monetary policy within the Economic and Monetary Union. There is a tight relation between business cycle synchronization and the economic convergence of the Member States of the Monetary Union....

The recent financial crisis has renewed the interest of economists, both at the theoretical and empirical level, in developing a better understanding of credit and its mechanisms. A rapidly growing strand of the literature views banks as facing funding restrictions that condition their borrowing...

This paper studies the long-term effect of business cycle, employment rate and employment growth rate on later wages and promotions. Using Swedish employer-employee match data, we find that workers who enter the labor market during a recovery phase of a business cycle (when the employment rate...