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Selective Use of Discretionary Public Employment and Economic Flexibility


  • Mathew Forstater

    (The Jerome Levy Economics Institute)


Full employment is normally associated with structuralrigidities that may result in production bottlenecks and inflationary pressures. Flexibility or elasticity of the production system istherefore a desirable feature of an economic system. Many standardmodels, however, exhibit flexibility because of the use of unacceptablyunrealistic assumptions. While unemployment and excess capacity areimportant real- life factors that endow economic systems with flexibility, the flexibility gained in this manner comes at a high social and economiccost. This paper explores these issues and proposes the selective use ofdiscretionary public employment as a means of promoting higher levels ofemployment--and even full employment--without creating structuralrigidities, resulting in negative enivronmental consequences, or causing undesirable geographic dislocation of workers.

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  • Mathew Forstater, 1998. "Selective Use of Discretionary Public Employment and Economic Flexibility," Macroeconomics 9802014, EconWPA.
  • Handle: RePEc:wpa:wuwpma:9802014 Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on PostScript; pages: 28; figures: included

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    References listed on IDEAS

    1. Imad A. Moosa, 1997. "On the Costs of Inflation and Unemployment," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 19(4), pages 651-666, July.
    2. L. Randall Wray, 1997. "Government as Employer of Last Resort: Full Employment without Inflation," Economics Working Paper Archive wp_213, Levy Economics Institute.
    3. repec:mes:postke:v:20:y:1997:i:2:p:167-182 is not listed on IDEAS
    4. Mario Amendola & Jean-Luc Gaffard, 1988. "The innovative choice. An economic analysis of the dynamics of technology," Post-Print halshs-00420361, HAL.
    5. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
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    JEL classification:

    • E - Macroeconomics and Monetary Economics

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