Where do real wage policies lead Belgium: a general equilibrium analysis

This paper is concerned with an application to Belgium of a two-period general equilibrium model; in the short run, market imperfections (like downward rigidities on real wages) may generate a temporary disequilibrium; in the long run, flexible prices and substitution between factors restore equilibrium on all markets. The ‘dynamic’ structure is thus actually meant to represent a short-run disequilibrium embedded in a long-run equilibrium, and only the short-run results are of real interest, but with a theoretically sound long-run analysis as a background. We show that in the short run, real w... Mehr ...