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A Simple Model Of Keynesian Unemployment

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  • Tetsuya Nakajima

Abstract

This paper presents a general equilibrium model that extends a static New Keynesian framework to an overlapping generations model. The model shows multiple stationary states, one of which has the following strong Keynesian features: (1) a reduction in wages generates increased unemployment through a decrease in consumption, and (2) the fiscal multiplier is larger than unity and is increasing in the wage share in income.

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  • Tetsuya Nakajima, 2010. "A Simple Model Of Keynesian Unemployment," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 239-256, May.
    • Handle: RePEc:bla:metroe:v:61:y:2010:i:2:p:239-256
    DOI: 10.1111/j.1467-999X.2009.04055.x
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    1. Boadway, Robin & Cuff, Katherine & Marceau, Nicolas, 2003. "Redistribution and employment policies with endogenous unemployment," Journal of Public Economics, Elsevier, vol. 87(11), pages 2407-2430, October.
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    6. Tetsuya Nakajima, 2010. "A Simple Model Of Keynesian Unemployment," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 239-256, May.
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    1. Tetsuya Nakajima, 2010. "A Simple Model Of Keynesian Unemployment," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 239-256, May.

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    More about this item

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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