Explaining Inflation and Unemployment

Ante Farm ()
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Ante Farm: Swedish Institute for Social Research, Stockholm University, Postal: SOFI, Stockholm University, SE-106 91 Stockholm, Sweden, http://www.sofi.su.se

No 5/2020, Working Paper Series from Stockholm University, Swedish Institute for Social Research

Abstract: This paper explains inflation and unemployment starting from new baseline models of price formation and labor demand. Inflation is always and everywhere a pricing phenomenon. Unemployment is every year determined as a residual, as people in the labor force without employment. Employment is determined by production and labor productivity, while production is determined by spending (as measured by nominal GDP) at prices set by firms.

Keywords: Inflation; employment; unemployment (search for similar items in EconPapers)
JEL-codes: E24 E31 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2020-05-31, Revised 2020-09-19
New Economics Papers: this item is included in nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sofiwp:2020_005

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