Mathew Forstater (The Jerome Levy Economics Institute)
Abstract
Full employment is normally associated with structuralrigidities that may result in production bottlenecks and inflationary pressures. Flexibility or elasticity of the production system istherefore a desirable feature of an economic system. Many standardmodels, however, exhibit flexibility because of the use of unacceptablyunrealistic assumptions. While unemployment and excess capacity areimportant real- life factors that endow economic systems with flexibility, the flexibility gained in this manner comes at a high social and economiccost. This paper explores these issues and proposes the selective use ofdiscretionary public employment as a means of promoting higher levels ofemployment--and even full employment--without creating structuralrigidities, resulting in negative enivronmental consequences, or causing undesirable geographic dislocation of workers.
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Paper provided by EconWPA in its series Macroeconomics with number
9802014.
Length: 28 pages Date of creation: 10 Feb 1998 Date of revision: Handle: RePEc:wpa:wuwpma:9802014
Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on PostScript; pages: 28; figures: included Contact details of provider: Web page: http://129.3.20.41
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