Is there an equilibrium rate of unemployment in the long run?
This paper examines the existence and stability of a long-run equilibrium rate of unemployment in a Post-Keynesian growth model and contrasts it with the NAIRU model. In the latter the equilibrium rate of unemployment determines unanticipated inflation in the short run and actual unemployment and output in the long run. The real balance effect plays the pivotal role in the transition from the short run to the long run. For the Keynesian model we take the Marglin-Bhaduri (1990) model as our starting point and complement it by Okun's Law for the labor market and a wage curve type of relation for distribution. The distinction between wage-led and profit-led growth regimes in the Marglin-Bhaduri model turns out to be crucial for the long-run equilibrium rate of unemployment. In the profit-led regime, there is a stable equilibrium rate of unemployment that, NAIRU-like, determines growth. In the wage-led regime, however, the equilibrium rate of unemployment is not stable. The long run is thus but a succession of short-run equilibria. Therefore the goods market dominates the labor market even in the long run.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 16 (2004)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/CRPE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CRPE20|
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.:
- David G. Blanchflower & Andrew J. Oswald, 1989.
"The Wage Curve,"
NBER Working Papers
3181, National Bureau of Economic Research, Inc.
- Nickell, Stephen, 1998. "Unemployment: Questions and Some Answers," Economic Journal, Royal Economic Society, vol. 108(448), pages 802-16, May.
- C Bean, 1992.
"European Unemployment: A Survey,"
CEP Discussion Papers
dp0071, Centre for Economic Performance, LSE.
- Rodrik, Dani, 1999.
"Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses,"
Journal of Economic Growth,
Springer, vol. 4(4), pages 385-412, December.
- Dani Rodrik, 1998. "Where Did All The Growth Go? External Shocks, Social Conflict, and Growth Collapses," NBER Working Papers 6350, National Bureau of Economic Research, Inc.
- Rodrik, Dani, 1998. "Where Did all the Growth Go? External Shocks, Social Conflict and Growth Collapses," CEPR Discussion Papers 1789, C.E.P.R. Discussion Papers.
- E. Yndgaard & Palle S. Andersen & Marc Klau, 1999. "Higher profits and lower capital prices: is factor allocation optimal?," BIS Working Papers 65, Bank for International Settlements.
- Sen, Anindya & Dutt, Amitava Krishna, 1995. "Wage bargaining, imperfect competition and the markup: Optimizing microfoundations," Economics Letters, Elsevier, vol. 48(1), pages 15-20, April.
- Dutt, Amitava Krishna, 1992. "Conflict inflation, distribution, cyclical accumulation and crises," European Journal of Political Economy, Elsevier, vol. 8(4), pages 579-597, December.
- Engelbert Stockhammer, 1999. "Robinsonian and Kaleckian Growth. An Update on Post-Keynesian Growth Theories," Department of Economics Working Papers wuwp067, Vienna University of Economics and Business, Department of Economics.
- Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, vol. 8(1), pages 25-40, March.
- Olivier Jean Blanchard, 1988.
"Unemployment: Getting the Questions Right--and Some of the Answers,"
502, Massachusetts Institute of Technology (MIT), Department of Economics.
- Olivier Jean Blanchard, 1988. "Unemployment: Getting the Questions Right - and some of the answers," NBER Working Papers 2698, National Bureau of Economic Research, Inc.
- Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
When requesting a correction, please mention this item's handle: RePEc:taf:revpoe:v:16:y:2004:i:1:p:59-77. 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: (Michael McNulty)
If references are entirely missing, you can add them using this form.