How are Product Demand Changes Transmitted to the Labour Market?
AbstractIn traditional Keynesian and neoclassical models, the transmission of product demand changes to the labour market generally involves wage-price sluggishness or counter-cyclical real wage movements. In practice, however, real wages are often acyclical or procyclical, and wages and prices are flexible in the longer run. This paper examines the main channels whereby product demand can affect employment under these conditions. The analysis suggests that the longer-term effectiveness of demand management policies depends significantly on the availability of a limited number of supply-side transmission channels.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 844.
Date of creation: Sep 1993
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Other versions of this item:
- Lindbeck, Assar & Snower, Dennis J, 1994. "How Are Product Demand Changes Transmitted to the Labour Market?," Economic Journal, Royal Economic Society, vol. 104(423), pages 386-98, March.
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J4 - Labor and Demographic Economics - - Particular Labor Markets
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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