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Wage Regimes, Accumulation and Finance Constraints : Keynesian Unemployment Revisited

Author

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  • Francesco Saraceno

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

This paper presents a sequential model suited to analyze transitions between equilibria. Disequilibrium dynamics are obtained from a standard monopolistic competition model, by introducing a sequential structure and reasonable hypotheses about technology, finance constraints, expectation formation, and the wage setting mechanism. The response to shocks crucially depends on the institutional features of the economy, and on the monetary policy stance. In particular, some degree of wage stickiness proves necessary to avoid explosive paths. This feature of the model makes it a good candidate for the reappraisal of Keynes' arguments on wages and unemployment.

Suggested Citation

  • Francesco Saraceno, 2004. "Wage Regimes, Accumulation and Finance Constraints : Keynesian Unemployment Revisited," Working Papers hal-01065470, HAL.
    • Handle: RePEc:hal:wpaper:hal-01065470
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-01065470
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    References listed on IDEAS

    as
    1. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    2. Dreze, Jacques H., 1997. "Walras--Keynes equilibria coordination and macroeconomics," European Economic Review, Elsevier, vol. 41(9), pages 1735-1762, December.
    3. Carl M. Campbell III & Kunal S. Kamlani, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(3), pages 759-789.
    4. Attar, Andrea & Campioni, Eloisa, 2007. "Credit cycles in a Neo-Austrian economy," Structural Change and Economic Dynamics, Elsevier, vol. 18(2), pages 249-269, June.
    5. Mario Amendola & Jean‐Luc Gaffard & Francesco Saraceno, 2004. "Wage Flexibility and Unemployment: The Keynesian Perspective Revisited," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(5), pages 654-674, November.
    6. Peter Howitt, 2002. "Looking Inside the Labor Market: A Review Article," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 125-138, March.
    7. Amendola, Mario & Gaffard, Jean-Luc, 1998. "Out of Equilibrium," OUP Catalogue, Oxford University Press, number 9780198293804.
    8. Bewley, Truman F., 1998. "Why not cut pay?," European Economic Review, Elsevier, vol. 42(3-5), pages 459-490, May.
    9. James Tobin, 1993. "Price Flexibility and Output Stability: An Old Keynesian View," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 45-65, Winter.
    10. Galí, Jordi, 2002. "New Perspectives on Monetary Policy, Inflation and the Business Cycle," CEPR Discussion Papers 3210, C.E.P.R. Discussion Papers.
    11. Hicks, J R, 1970. "A Neo-Austrian Growth Theory," Economic Journal, Royal Economic Society, vol. 80(318), pages 257-281, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Wages and Unemployment
      by Francesco Saraceno in Sparse Thoughts of a Gloomy European Economist on 2012-06-01 19:06:43

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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    Cited by:

    1. Mario Amendola & Jean‐Luc Gaffard & Francesco Saraceno, 2004. "Wage Flexibility and Unemployment: The Keynesian Perspective Revisited," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(5), pages 654-674, November.
    2. Jean-Paul Fitoussi & Eloi Laurent, 2008. "North by Northwest : What's Wrong with the French Model and How Can the Nordic Model Help ?," Sciences Po Economics Publications (main) hal-00973052, HAL.
    3. Jean-Luc Gaffard & Francesco Saraceno, 2007. "International Trade and Domestic Distortions: Modelling the Transition Process," Documents de Travail de l'OFCE 2007-18, Observatoire Francais des Conjonctures Economiques (OFCE).
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    5. Jean-Luc Gaffard & Francesco Saraceno, 2012. "International trade and domestic distortions," Journal of Evolutionary Economics, Springer, vol. 22(2), pages 275-301, April.
    6. Jean-Paul Fitoussi & Eloi Laurent, 2009. "Macroeconomic and social policies in the EU 15: the last two decades," Sciences Po Economics Publications (main) hal-01066208, HAL.
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    8. Mario Amendola & Jean-Luc Gaffard & Francesco Saraceno, 2012. "Production Process Heterogeneity, Time to Build, and Macroeconomic Performance," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 263-294.
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    10. repec:spo:wpmain:info:hdl:2441/1261 is not listed on IDEAS

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    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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