Macroeconomic Stability

Hiroyuki Odagiri

in Growth through Competition, Competition through Growth

Published in print May 1994 | ISBN: 9780198288732
Published online November 2003 | e-ISBN: 9780191596711 | DOI:
 Macroeconomic Stability

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This chapter focuses on the employment adjustment behaviour of Japanese management and the effect of this on macroeconomic stability. With a theoretical model and an empirical application, we argue that the labour‐hoarding behaviour of Japanese management, that is, the lay‐off minimization behaviour (with a certain profitability constraint), has contributed to macro‐stability. Not only does it reduce unemployment by the amount of retained (excess) labour but it has also reduced macro unemployment through the multiplier effect. A study on the mark‐up behaviour of Japanese firms during business cycles in comparison to that of American firms also gives evidence consistent with the labour‐hoarding hypothesis.

Keywords: employment adjustment; labour hoarding; lay‐off; macroeconomy; mark‐up; multiplier effect; stability; unemployment

Chapter.  7869 words. 

Subjects: Business and Management

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