A Keynesian model of aggregate demand in the long‐run

Ian M. McDonald

Metroeconomica, 2021, vol. 72, issue 3, 442-459

Abstract: This paper develops the Keynesian theory of aggregate demand in the long‐run in which persistently low levels of aggregate demand can generate persistently low levels of activity with the associated persistently high rates of unemployment. Wages are determined by firm‐worker bargaining/sharing. Investment is influenced by monopoly power, aggregate demand and the interest rate. Decreasing rates of deflation of money wages and prices even at high rates of unemployment are prevented by workers being assumed to be loss averse with respect to reductions in their wages below a reference real wage.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/meca.12328

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:metroe:v:72:y:2021:i:3:p:442-459

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0026-1386

Access Statistics for this article

Metroeconomica is currently edited by Heinz D. Kurz and Neri Salvadori

More articles in Metroeconomica from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().