Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
The purpose of this paper is to study the effect of wage flexibility on economic development with public capital accumulation. For this purpose, we examine the stabilizing power of wage flexibility in a model of a small open economy with public capital. We then show that wage flexibility is conducive to economic stability. In particular, we find that there exists a threshold value in the degree of wage flexibility such that the stationary point is stable (resp. unstable) if the degree is greater (resp. less) than the threshold value, and that cyclical fluctuations arise when the degree is sufficiently close to the threshold value.