Broadening The Theory Of Aggregate Supply: A "New Critical" Proposal
In a proposed "New Critical" dual to the standard New Classical view of the labor market, the money wage rate is given, but the real supply of labor is sensitive to the real wage (the "Dobb Effect"). Expansionary policy raises the price level, lowering the real wage rate and forcing workers to supply more labor. The long-run aggregate supply curve is horizontal. A preliminary synthesis of the New Classical and New Critical models produces a positive multiplier. This broader view of the labor market suggests that neither the "policy ineffectiveness" extreme nor the "fine tuning" extreme constitutes an adequate basis for macroeconomic policy.
Volume (Year): 32 (2006)
Issue (Month): 2 (Spring)
|Contact details of provider:|| Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA|
Phone: (201) 684-7346
Web page: https://www.quinnipiac.edu/eea/
More information through EDIRC
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.:
- McCallum, Bennett T, 1980. "Rational Expectations and Macroeconomic Stabilization Policy: An Overview," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(4), pages 716-46, November.
When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:32:y:2006:i:2:p:241-257. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross)
If references are entirely missing, you can add them using this form.