THE RELATIONSHIP BETWEEN CAPITAL STOCK, UNEMPLOYMENT AND WAGES IN NINE EMU COUNTRIES |
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| Authors: | Philip Arestis Michelle Baddeley and Malcolm Sawyer |
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| Institution: | Cambridge Centre for Economic and Public Policy, Department of Land Economy, University of Cambridge, Cambridge CB3 9EP, UK;, Gonville &Caius College, Cambridge CB2 1TA, UK;, and Leeds University Business School, University of Leeds, Leeds LS2 9JT, UK |
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| Abstract: | The focus of this paper is to investigate the importance of the capital stock in the determination of wages and unemployment in a range of EMU countries and to compare the results across countries. A time‐series analysis is conducted in the case of nine euro area countries, which were selected solely on the basis of data availability and consistency: Austria, Belgium, Finland, France, Germany, Italy, Ireland, the Netherlands and Spain. The paper begins with a short review of the literature on capital stock and unemployment, before it deals with the theoretical model. This is followed by estimation and testing of the theoretical model put forward, using both time‐series and panel data. The results are supportive of the main hypothesis of the paper: capital stock is an important determinant of unemployment and wages in the countries considered for the purposes of the paper. |
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| Keywords: | capital stock time-series analysis unemployment wages |
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