Regime Transitions, Spillovers and Buffer Stocks

This book develops a macro disequilibrium model, focusing on the production sector and the associated spillover effects. Firms' decisions on investment, output supply and labor demand are analysed on basis of an approach involving excess demand, profitability and relative prices. As a novelty in such an analysis, inventories and unfilled orders act as buffer stocks.

Contenu

1. Introduction.- 1.1 Alternative theories of macroeconomic fluctuations.- 1.2 Assessment of the controversy - Motivation of the present study.- 1.3 Scope and limitations of the investigation.- 1.4 Set-up of the paper.- 2. The Micro Model.- 2.1 Spillovers and transactions.- 2.2 Discussion of the spillover elasticities.- 2.3 Regimes.- Appendix: Comparision with other spillover-formulations.- 3. Derivation of the Aggregate Model.- 3.1 Aggregation.- 3.2 Introduction of error terms.- 3.3 Adopting an econometrically tractable approximation.- 3.4 Accuracy of the approximation.- 4. Modified Version: Buffer Role of Inventories and Unfilled Orders.- 5. Specification of the Aggregate Econometric Equations.- 5.1 Labor supply.- 5.2 Demand for domestic output.- 5.3 Notional labor demand, notional goods supply and investment.- 5.3.1 Preliminaries.- 5.3.2 Malinvaud's investment model.- 5.3.3 Adopting a vintage-approach.- 5.3.4 Scrapping of old equipment.- 6. Structure of the Model, Method of Estimation and Dynamic Ncxtensions.- 6.1 Allowing for a trend in labor market mismatch.- 6.2 Summary of the model.- 6.3 Method of estimation.- 6.4 Labor hoarding, partial adjustment and error correction dynamics.- 7. Estimation results.- 7.1 Empirical versions - Models 1 to 4.- 7.2 Model 1: No buffer stocks, 'static' labor hoarding.- 7.3 Model 2: No buffer stocks, dynamic labor hoarding.- 7.4 Model 3: Allowing for buffer stocks.- 7.5 Model 4: Inclusion of the investment equation.- 7.6 Interpreting Model 4 - Testing a priori parameter restrictions.- 7.7 Intertemporal substitution in labor supply - Comparison with other studies.- 8. Testing Parameter Stability.- 9. Simulations.- 9.1 Fit of the model (static simulation).- 9.2 Development of the Swiss economy: Regimes and spillovers.- 9.3 The Swiss labor market - A miracle?.- 9.4 Dynamic tracking performance.- 9.5 Simulating short-run and long-run effects of autonomous changes, assessing dynamic stability.- 9.5.1 Short-term impact of a demand shock (Keynesian demand stimulation).- 9.5.2 Reference simulation for examining long-run effects.- 9.5.3 Checking for dynamic stability.- 9.5.4 Long-run effects of permanent and single-period demand shocks.- 9.5.5 Simulation of a permanent wage (and price) reduction.- 10. Summary and Conclusions.- References.