The Fixwage Path
The Fixwage Path
This chapter analyzes the Fixwage path in the Standard Case. It begins with a steady state under an old technique. This states that at time 0 (which is the start of year 0) there is a change in technology, by which new processes become available that were not available before. At the given wage (carried over from the old steady state and remaining inflexible), there will be some particular process which is now the most profitable. Since the wage is fixed and remains fixed, that same new technique will continue to be dominant, throughout the Traverse which is discussed. Thus, there is no more than a single switch, from the old technique (C*) to the new technique (C). The chapter completes the determination of the Fixwage path, under a Q-assumption, then asks how much difference would be made, if that assumption were relaxed.
Keywords: Standard Case, Traverse, Full Employment, total employment, Early Phase
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