IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

A Keynesian Solution to Classical Unemployment

  • Keith MacKinnon

    (York University, Canada)

Registered author(s):

    In a classical macroeconomic model, the real wage equals labor's marginal product and the real interest rate can fall no lower than the rate of investment. These rigidities may prevent labor market clearing. Economies with rapid labor supply growth, capital immobility and a low capital labor ratio will be prone to such `classical unemployment'. Downward ¡ãexibility in real wages restores full employment, lowers real interest rates and stimulates investment provided that ¡¥rms also perceive that they are rationed in output sales. Such quantity constraints have been identi¡¥ed by Clower (1965) as a critical feature in Keynes (1936).

    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.

    File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/emp2.pdf
    File Function: First version, 1999
    Download Restriction: no

    Paper provided by York University, Department of Economics in its series Working Papers with number 1999_05.

    as
    in new window

    Length: 24 pages
    Date of creation: Nov 1999
    Date of revision:
    Handle: RePEc:yca:wpaper:1999_05
    Contact details of provider: Postal: 4700 Keele Street, Toronto, Ontario, M3J 1P3
    Phone: (416) 736-5083
    Fax: (416) 736-5987
    Web page: http://dept.econ.yorku.ca/

    More information through EDIRC

    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.:

    as in new window
    1. Uzawa, H, 1969. "Time Preference and the Penrose Effect in a Two-Class Model of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 77(4), pages 628-52, Part II, .
    2. Douglas D. Purvis, 1975. "The Neoclassical Theory of the Firm: A Note on the Production and Investment Decisions," Working Papers 178, Queen's University, Department of Economics.
    3. Barro, Robert J & Grossman, Herschel I, 1971. "A General Disequilibrium Model of Income and Employment," American Economic Review, American Economic Association, vol. 61(1), pages 82-93, March.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:yca:wpaper:1999_05. 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: (Support)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.