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WP 2010-5 Institutions, Aggregate Demand and Cross-Country Employment Performance: Alternative Theoretical Perspectives and the Evidence



In New Classical and New Keynesian thinking, the cross-country pattern of unemployment reflects prevailing equilibrium rates, which in turn are mainly explained by the protective labor market institutions that produce market rigidities. While this orthodox view has framed nearly all of the research that has addressed this issue, the evidence to date is not very compelling; recent work in the Keynesian tradition suggests that more attention should be paid to capital accumulation and monetary/fiscal policy. The central claim of this paper is that a still richer account requires embedding the Keynesian account in a comparative political economy framework to explain both levels of aggregate demand and the translation of demand to employment (and unemployment).

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  • David Howell, 2010. "WP 2010-5 Institutions, Aggregate Demand and Cross-Country Employment Performance: Alternative Theoretical Perspectives and the Evidence," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2010-5, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  • Handle: RePEc:epa:cepawp:2010-5

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    References listed on IDEAS

    1. Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
    2. Alan J. Auerbach & Daniel R. Feenberg, 2000. "The Significance of Federal Taxes as Automatic Stabilizers," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 37-56, Summer.
    3. Jeffrey Wenger & Christian E. Weller, 2008. "The Interplay between Labor and Financial Markets: What are the Implications for Defined Contribution Accounts?," Working Papers wp162, Political Economy Research Institute, University of Massachusetts at Amherst.
    4. Olivier Blanchard & Giovanni Dell'Ariccia & Paolo Mauro, 2010. "Rethinking Macroeconomic Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 199-215, September.
    5. Duncan McVicar, 2006. "Why do disability benefit rolls vary between regions? A review of the evidence from the USA and the UK," Regional Studies, Taylor & Francis Journals, vol. 40(5), pages 519-533.
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