Have the Early Coordination Failures Models Achieved Keynes's Programme ?
AbstractThe aim of this paper is to assess how three seminal coordination failure models (Diamond ( ), Howitt  and Roberts ) have fared against ?Keynes?s programme?. The first part of the paper characterises Keynes?s programme as consisting of the following four objectives: (a) demonstrating the existence of involuntary unemployment, (b) demonstrating that wage rigidity can be exonerated as its cause, (c) giving a general equilibrium interdependency explanation of the phenomenon within a perfect competition framework, and (d) demonstrating that demand stimulation is the proper remedy to suppress involuntary unemployment. In a second part, I claim that no correct assessment of Keynes?s programme can be made without drawing a distinction between involuntary unemployment and underemployment. These prerequisites being settled, in part three I undertake the study of the three models to conclude that none of them succeed in achieving Keynes? programme in its entirety. In the last part of the paper, I raise the issue as to whether Keynesian economists should continue to fight for the involuntary unemployment concept.
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Bibliographic InfoArticle provided by Dalloz in its journal Revue d'économie politique.
Volume (Year): Volume 115 (2005)
Issue (Month): 4 ()
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Web page: http://www.cairn.info/revue-d-economie-politique.htm
involuntary unemployment; coordination failures; Keynes;
Other versions of this item:
- Michel, DE VROEY, 2004. "Have the early coordination failures models achieved Keynes’s programme ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E20 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August.
- Peter Howitt, 1986. "The Keynesian Recovery," Canadian Journal of Economics, Canadian Economics Association, vol. 19(4), pages 626-41, November.
- Axel Leijonhufvud, 1983. "What Would Keynes Have Thought of Rational Expectations?," UCLA Economics Working Papers 299, UCLA Department of Economics.
- Drazen, Allan, 1987. "Reciprocal externality models of low employment," European Economic Review, Elsevier, vol. 31(1-2), pages 436-443.
- Peter Howitt, 2002. "Looking Inside the Labor Market: A Review Article," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 125-138, March.
- Weitzman, Martin L, 1982. "Increasing Returns and the Foundations of Unemployment Theory," Economic Journal, Royal Economic Society, vol. 92(368), pages 787-804, December.
- Michel, DE VROEY, 2005. "Involuntary Unemployment : the Elusive Quest for a Theory," Discussion Papers (ECON - DÃ©partement des Sciences Economiques) 2005004, Université catholique de Louvain, Département des Sciences Economiques.
- Leijonhufvud, Axel, 1983. "What would Keynes have thought of rational expectations?," Discussion Papers, Series 1 177, University of Konstanz, Department of Economics.
- J. A. Kregel, 1987. "The Effective Demand Approach to Employment and Inflation Analysis," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 10(1), pages 133-145, October.
- Roberts, John, 1987. "An Equilibrium Model with Involuntary Unemployment at Flexible, Competitive Prices and Wages," American Economic Review, American Economic Association, vol. 77(5), pages 856-74, December.
- Howitt, Peter, 1985. "Transaction Costs in the Theory of Unemployment," American Economic Review, American Economic Association, vol. 75(1), pages 88-100, March.
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