Wages and growth in an open economy

• Main Author: Wissén, Pehr
• Format: Doctoral Thesis
• Language: English
• Published: Handelshögskolan i Stockholm, Samhällsekonomi (S) 1982
• Subjects: Economics; Nationalekonomi
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:hhs:diva-791; http://nbn-resolving.de/urn:isbn:91-7258-144-1

In a small open economy, the problem of finding the equilibrium wage rate is crucial for achieving the goals of economic policy. Theoretical work has mainly concentrated on the short-run aspects of the problem. Only recently has the scope been broadened to also include the linkages between the wage rate and economic growth. This dissertation employs neoclassical growth theory to analyze problems of economic growth in a small open economy. The study consists of two major parts. The first part adapts neoclassical, general equilibrium models of economic growth to the situation facing a small open economy. The second part is an empirical simulation study of the traded goods sector in Sweden, during the post-war period. A vintage growth model is used to illustrate the relationships between wages, productivity and real growth. Particular interest is devoted to the presence of slack, and its dependence on the wage rate. The results indicate that the stagnation in the mid-1970s may have its roots in the development of the product real wage since the late 1960s. This has important implications for economic policy. === <p>Diss. Stockholm : Handelshögskolan, 1982</p>