Title : Derivation of the Dynamic Model of the Permanent and Temporary Employment and Also of Their Output

Authors : Md. Sharif Hossain

Abstract : Nowadays, Statistics and Econometrics have become inevitable in the field of Business Cycles study as well as in almost every field of social and economic research. Not only in social and economic research, but in the field of engineering and also in the field of medical science, Statistics and Econometrics are widely applicable. In Statistics, Econometrics and Business Cycle studies, different tools and procedures have been developed that are capable of elegant analysis of various phenomenon in different field of research. Basically, Econometrics can be thought of as a combination of economic theory, mathematical economics, statistics, and mathematical statistics with computing as vehicle of estimation. And Business Cycle study can be thought of as a part of Economics, Statistics, and Econometrics, in which field theoretical and mathematical tools both are of paramount importance. The main concern of mathematical economics is to express theory in mathematical form (equational form) without regarding to measurability or empirical verification of the theory. Econometrics is mainly interested in the empirical verification of the mathematical form of economic theory. But, it is to be born in mind that econometric principle can be applied in almost all fields of human life. Industrial and business sectors play the dynamic role in the total process of economic growth. The generation and sustenance of economic growth especially in the early stage of most developed and developing countries are to a large extend determined by the performance of industrial sector and also in business sector. Especially, Business Cycle stydy are widely applicable in the field of industrial and business sector to make decision about the economic activities at the present time and also for future time. Business cycles, periods of high economic activity followed by those of unsatisfactory performance have been on increasing concern to the general people, especially to those involved in industry, business and government. Economic instability of the develpoed and developing countries reduces not only the degree of certainty about the future but also personal and managarial freedom. Managers and public officials are constantly urged to make "economic" decisions which should be prove to be correct in the long term. In order to do so, decisions makers need to possess a basic understanding of the factors which cause economic fluctuations and most of all, how to anticipate and to analyze changes in economic activity. The Business Cycle study enables us to find the factors which are responsible for the economic fluctuations. On the basis of the forecasting results, desirable decisions can be made about output, employment, costs, shipments etc. But they might not be able to make precise forecasts about the future, they can neverthless observe and describe general economic patterns. In the field of industrial sectors, businessmen can bring benefits through introducing the forecasting concepts and techniques and hence from the explanations of business cycles. In industrial sector for economic growth it is much more important to make decisions about output, employment, cost and also for shipment at the present time and also for future. In 1989 Frank de Leeuw has been provided a theoretical model to make decision about output, employment, shipments, etc on the basis of the pioneering work of Holt, Modigliani, Muth and Simon's (1960). But from the Frank de Leeuw's (1989) methodology, we can not make decision, or we can not find the efficiency of the permanent and temporary employment seperately. That is why, the principle purpose of this paper is to modify his developed cost function in order to make decision, or to find the efficiency of the permanent and temporary employment seperately. The modification has been done for the orders model, and also for the shipments model. Finally, in order to make decision on the basis of the forecasting results, the dynamic model of the permanent and temporary employment and also of their output has bee been obtained. The dynamic models have been derived, by minimizing the discounted sum of present and future cost function and then using the reduced form equations system. For the empirical verification of the theoretical construct another attempt has been made to simulate a Jpanese quarterly data. Simulations have been done only for the shipments model, but for the orders model, data are not avialbale, that is why we are unable to simulate the data on the basis of the orders model. Finally, for the empirical verification of the theoretical construct of this study, a set of economical data has been collected from the Nekkei Electronic Data System Year book.

Journal : The Keizai Ronkyu, The Graduate School of Economics, Kyushu University, Japan Volume : 105 Year : 1999 Issue : 1
Pages : 93-115 City : Edition : Editors :
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