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| Tekijä: | Alogoskoufis, G. S. |
| Otsikko: | Aggregate employment and intertemporal substitution in the UK. |
| Lehti: | Economic Journal
1987 : JUN, VOL. 97:386, p. 403-415 |
| Asiasana: | LABOUR SUPPLY ECONOMETRIC MODELS PAY UNITED KINGDOM |
| Kieli: | eng |
| Tiivistelmä: | The explanatory power of the intertemporal substitution hypothesis /ISH/ for employment fluctuations in the UK is re-examined. The differences from the previous UK studies are shown. The model that is estimated and tested is derived as the optimal decision rule of an infinitely living household, with time separable preferences, and an intertemporal CES utility function. The implications of ISH about aggregate demand policies hinge on the pricing rules followed by firms. These determine whether the level of aggregate demand shifts the demand for labour curve or not. At last an account of two of the empirical failures of the ISH are mentioned. An appropriate extension of ISH might result in better foundation of macroeconomic models. |
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