Consider the following model of wage adjustment in the labor market: where W e is the equilibrium
Question:
Consider the following model of wage adjustment in the labor market:
where We is the equilibrium wage rate, and λ is a positive parameter. If λ = 0.6, is the model monotonically stable, cyclically stable, monotonically unstable, or cyclically unstable? Explain why your answer makes sense logically.
Transcribed Image Text:
W-W-1 (1-2) (We - W-1) W,(1-2)W+W-1
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Related Book For
Essential Statistics Regression And Econometrics
ISBN: 9780123822215
1st Edition
Authors: Gary Smith
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