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Nominal Shocks, Endogenous Growth and the Business Cycle
The Economic Journal
Vol. 107, No. 441 (Mar., 1997), pp. 467-474
Stable URL: http://www.jstor.org/stable/2957956
Page Count: 8
You can always find the topics here!Topics: Economic fluctuations, Economic growth models, Human capital, Employment, Steady state economies, Increasing returns, Demand side economics, Long run economic growth, Structural capital, Capital investments
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The paper proposes a simple model of wage setting and imperfect competition that takes into account knowledge and human capital accumulation. We show that, given increasing returns to reproducible factors, transitory disturbances to output that originate on the demand side of the economy produce permanent upward shifts in the aggregate production function. This implies that the presence of a stochastic trend in the process for income may not be informative per se about the forces driving the cycle.
The Economic Journal © 1997 Royal Economic Society