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Wage Regimes, Accumulation and Finance Constraints: Keynesian Unemployment Revisited

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Author Info
Francesco Saraceno () (Observatoire Français des Conjonctures Économiques)

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Abstract

This paper presents a sequential model suited to analyze transitions between equilibria. Disequilibrium dynamics are obtained from a standard monopolistic competition model, by introducing a sequential structure and reasonable hypotheses about technology, finance constraints, expectation formation, and the wage setting mechanism. The response to shocks crucially depends on the institutional features of the economy, and on the monetary policy stance. In particular, some degree of wage stickiness proves necessary to avoid explosive paths. This feature of the model makes it a good candidate for the reappraisal of Keynes’ arguments on wages and unemployment.

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Publisher Info
Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2004-01.

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Date of creation: 2004
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Handle: RePEc:fce:doctra:0401

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Related research
Keywords: Disequilibrium; Keynesian Economics; Fix Price Models; Time to Build;

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Find related papers by JEL classification:
C63 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computational Techniques
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

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References listed on IDEAS
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.:
  1. Attar, Andrea & Campioni, Eloisa, 2007. "Credit cycles in a Neo-Austrian economy," Structural Change and Economic Dynamics, Elsevier, vol. 18(2), pages 249-269, June. [Downloadable!] (restricted)
  2. Bewley, Truman F., 1998. "Why not cut pay?," European Economic Review, Elsevier, vol. 42(3-5), pages 459-490, May. [Downloadable!] (restricted)
  3. Tobin, James, 1993. "Price Flexibility and Output Stability: An Old Keynesian View," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 45-65, Winter. [Downloadable!] (restricted)
    Other versions:
  4. Mario Amendola & Jean-Luc Gaffard & Francesco Saraceno, 2001. "Wage Flexibility and Unemployment: The Keynesian Perspective Revisited," Documents de Travail de l'OFCE 2001-02, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
    Other versions:
  5. Galí, Jordi, 2002. "New Perspectives on Monetary Policy, Inflation and the Business Cycle," CEPR Discussion Papers 3210, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. 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. [Downloadable!] (restricted)
  7. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
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  8. DREZE, Jacques H., 1997. "Walras-Keynes equilibria coordination and macroeconomics," CORE Discussion Papers 1997051, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Campbell, Carl M, III & Kamlani, Kunal S, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 759-89, August.
  10. Hicks, J R, 1970. "A Neo-Austrian Growth Theory," Economic Journal, Royal Economic Society, vol. 80(318), pages 257-81, June. [Downloadable!] (restricted)
  11. Dreze, Jacques H., 1997. "Walras--Keynes equilibria coordination and macroeconomics," European Economic Review, Elsevier, vol. 41(9), pages 1735-1762, December. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Mario Amendola & Jean-Luc Gaffard & Francesco Saraceno, 2001. "Wage Flexibility and Unemployment: The Keynesian Perspective Revisited," Documents de Travail de l'OFCE 2001-02, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
    Other versions:
  2. Jean-Paul Fitoussi & Eloi Laurent, 2008. "North by Northwest: What’s Wrong with the French Model and How Can the Nordic Model Help," Documents de Travail de l'OFCE 2008-18, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
  3. Jean-Paul Fitoussi & Eloi Laurent, 2009. "Macroeconomic and social policies in the EU 15 : the last two decades," Documents de Travail de l'OFCE 2009-20, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
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