A welfare economics foundation for the full-employment policy
Combining the dynamic Keynesian cross (Otaki, M., 2007. The dynamically extended Keynesian cross and the welfare-improving fiscal policy. Economics Letters 96, 23-29.) with modified efficient wage bargaining, based on McDonald and Solow (McDonald, I.M. and Solow, R.M. 1981. Wage bargaining and employment. American Economic Review 71, 896-908.), we have succeeded in showing a kind of involuntary unemployment as an equilibrium outcome.
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- Lucas, Robert E, Jr, 1978. "Unemployment Policy," American Economic Review, American Economic Association, vol. 68(2), pages 353-57, May.
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
- Otaki, Masayuki, 2007. "The dynamically extended Keynesian cross and the welfare-improving fiscal policy," Economics Letters, Elsevier, vol. 96(1), pages 23-29, July.
- Lucas, Robert E., 1977. "Understanding business cycles," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 5(1), pages 7-29, January.
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