Effective Demand and Unemployment
The coordination of production and consumption decisions is analysed in a static model where the interdependence between production, income and demand is explicitly modelled. With imperfect competition and non-convex production technologies it is shown that there exists a zero pure profit equilibrium with a positive level of employment and possible involuntary employment. Finally it is shown how to arrange a form of external intervention so as to ensure full employment.
|Date of creation:||1987|
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Web page: http://www2.warwick.ac.uk/fac/soc/economics/
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- Weitzman, Martin L, 1982. "Increasing Returns and the Foundations of Unemployment Theory," Economic Journal, Royal Economic Society, vol. 92(368), pages 787-804, December.
- Oliver Hart, 1982. "A Model of Imperfect Competition with Keynesian Features," The Quarterly Journal of Economics, Oxford University Press, vol. 97(1), pages 109-138.
- Dixon, Huw, 1987. "A Simple Model of Imperfect Competition with Walrasian Features," Oxford Economic Papers, Oxford University Press, vol. 39(1), pages 134-160, March.
- Benassy, Jean-Pascal, 1987. "Imperfect competition, unemployment and policy," European Economic Review, Elsevier, vol. 31(1-2), pages 417-426.
- Casarosa, Carlo, 1981. "The Microfoundations of Keynes's Aggregate Supply and Expected Demand Analysis," Economic Journal, Royal Economic Society, vol. 91(361), pages 188-194, March.
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