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

Christian Groth, Jakob B. Madsen

Research output: Contribution to journalArticleResearchpeer-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 Sept 2016


  • Elasticity of factor substitution
  • Endogenous oscillations
  • Medium-term cycles
  • Real-wage Phillips curve
  • Tobin's q

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