The Relationship between Capital Stock, Unemployment and Wages in Nine EMU Countries

24 Pages Posted: 11 Apr 2007

See all articles by Philip Arestis

Philip Arestis

University of Cambridge - Department of Land Economy; Universidad del País Vasco (UPV/EHU)

Michelle Baddeley

University of Cambridge - Gonville & Caius College

Malcolm C. Sawyer

Levy Economics Institute

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.

Suggested Citation

Arestis, Philip and Baddeley, Michelle and Sawyer, Malcolm C., The Relationship between Capital Stock, Unemployment and Wages in Nine EMU Countries. Bulletin of Economic Research, Vol. 59, No. 2, pp. 125-148, April 2007. Available at SSRN: https://ssrn.com/abstract=978545 or http://dx.doi.org/10.1111/j.0307-3378.2007.00254.x

Philip Arestis (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

Universidad del País Vasco (UPV/EHU)

Barrio Sarriena s/n
Leioa, Bizkaia 48940
Spain

Michelle Baddeley

University of Cambridge - Gonville & Caius College ( email )

Trinity Street
Cambridge CB2 1TA
United Kingdom

Malcolm C. Sawyer

Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States
845-758-7700 (Phone)
845-758-1149 (Fax)

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