A Macro Disequilibrium Model for Switzerland

Stalder, Peter

In: Recherches Economiques De Louvain / Louvain Economic Review, 1991, vol. 57, no. 2, p. 125-158

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    This paper presents a disequilibrium model for Switzerland, focusing on the production sector and the associated spillover effects. Firms' decisions on output supply, labor demand and investment are analysed on basis of a vintage approach, involving pressure of demand, profitability and relative prices as determinants. Macro relationships are derived by aggregating over micro markets on which regimes are allowed to differ. In the resulting nonlinear macro structure the response of output and employment to demand-side and supply-side factors varies through the cycle, depending on the regime-mix (measured by survey data). Inventories and unfilled orders act as buffer stocks, modifying the dynamic link between current demand and output