Broadening The Theory Of Aggregate Supply: A "New Critical" Proposal

David Laibman ()
Additional contact information
David Laibman: Program in Economics, Graduate School, City University of New York

Eastern Economic Journal, 2006, vol. 32, issue 2, 241-257

Abstract: In a proposed "New Critical" dual to the standard New Classical view of the labor market, the money wage rate is given, but the real supply of labor is sensitive to the real wage (the "Dobb Effect"). Expansionary policy raises the price level, lowering the real wage rate and forcing workers to supply more labor. The long-run aggregate supply curve is horizontal. A preliminary synthesis of the New Classical and New Critical models produces a positive multiplier. This broader view of the labor market suggests that neither the "policy ineffectiveness" extreme nor the "fine tuning" extreme constitutes an adequate basis for macroeconomic policy.

Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://web.holycross.edu/RePEc/eej/Archive/Volume32/V32N2P241_257.pdf (application/pdf)

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:eej:eeconj:v:32:y:2006:i:2:p:241-257

Access Statistics for this article

Eastern Economic Journal is currently edited by Cynthia A. Bansak, St. Lawrence University and Allan A. Zebedee, Clarkson University

More articles in Eastern Economic Journal from Eastern Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Victor Matheson, College of the Holy Cross ().