Medium-term fluctuations and the “Great Ratios” of economic growth

Jakob B. Madsen, Christian Groth

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)


Evidence for the OECD countries show that the “great ratios”, such as the unemployment rate, factor shares, Tobin's q, and the investment-capital ratio, fluctuate significantly on medium-term frequencies of 8–40 years duration. To explain these medium-term fluctuations, we establish a macro-dynamic model where the q-theory of investment is combined with sluggish real-wage adjustment in the labour market. In this framework, responses to shocks show persistence and amplification. A high degree of real-wage rigidity combined with a low elasticity of factor substitution leads to damped internal oscillations and hump-shaped impulse-response functions.

Original languageEnglish
Pages (from-to)149-176
Number of pages28
JournalJournal of Macroeconomics
Publication statusPublished - 1 Sep 2016
Externally publishedYes


Dive into the research topics of 'Medium-term fluctuations and the “Great Ratios” of economic growth'. Together they form a unique fingerprint.

Cite this