A Cross-Country Study on Okun's Law

Okun's Law postulates an inverse relationship between movements of the unemployment rate and the real gross domestic product (GDP). In this article we investigate Okun's law for 15 OECD countries and check for its the structural stability. By using data on employment and the labor force we infer whether structural instability is caused either from the demand side or the supply side.Okun's Law; Time Variing Parameter Models

Entry and exit dynamics in the Austrian manufacturing industries

This article investigates the determinants of entry and exit in the Austrian manufacturing sector based on 1981 to 1994 data. We study the response of entry, exit and other indicators of firm dynamics to changes in average plant size, size heterogeneity, concentration, incentives and vertical integration. By applying Bayesian simulation methods we estimate random coefficient models and study the symmetry of the determinants of entry and exit. Our empirical analysis shows that entry and exit rates are driven by the same determinants. The impacts of these determinants are nearly homogeneous for both, entry rates and exits rates, respectively. Moreover, we find (i) that changes in average plant size, size heterogeneity and concentration are not symmetric with respect to entry and exit, (ii) that changes in the growth of sales is weakly symmetric and (iii) that the growth rate of employment is strongly asymmetric across industries in Austrian manufacturing. Furthermore, we infer from the data that the turnover of firms influences the changes in the number of competitors. Low entry rates go hand in hand with low net entry rates and a low turnover. (author's abstract)Series: Working Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness

Regulation of a Complementary Imputed Good in a Competitive Environment

This article investigates the problem of a regulated imputed good which is used in the production process of the final goods. The relationship between the firm producing the essential input factor and the regulating authority is described by a standard principal-agent setup. By assuming a fixed functional relationship in the production process between the imputed good and the final market goods, there exists some kind of separation between regulation and competition on the final good market. Thus, the degree of competitiveness on the final good market has no effect on optimal contracts. Moreover, in this model vertical integration weakly dominates vertical disintegration in welfare for subadditive cost functions.