The paper explores why different regimes of unemployment might emerge and what the role of quantity expectations is. Suppose that both households and firms take quantity rationing expectations into account. Then it can be shown that involuntary unemployment in the sense that effective demand is deficient would occur as long as households react to the quantity (constraint) expectations more strongly than firms do. We also show that oniy when households are more pessimistic than firms are do quantity expectations exhibit "bootstraps” property, i.e., the regime of Keynesian unemployment is more likely than that of Classical unemployment to emerge today if people expect that Keynesian unemployment will prevail tomorrow. [020]
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Volume (Year): 2 (1988) Issue (Month): 3 (October) Pages: 61-77 Download reference. The following formats are available: HTML
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