Wage Regimes, Accumulation and Finance Constraints: Keynesian Unemployment Revisited

Francesco Saraceno ()

No 2004-01, Documents de Travail de l'OFCE from Observatoire Francais des Conjonctures Economiques (OFCE)

Abstract: This paper presents a sequential model suited to analyze transitions between equilibria. Disequilibrium dynamics are obtained from a standard monopolistic competition model, by introducing a sequential structure and reasonable hypotheses about technology, finance constraints, expectation formation, and the wage setting mechanism. The response to shocks crucially depends on the institutional features of the economy, and on the monetary policy stance. In particular, some degree of wage stickiness proves necessary to avoid explosive paths. This feature of the model makes it a good candidate for the reappraisal of Keynes’ arguments on wages and unemployment.

Keywords: Disequilibrium; Keynesian Economics; Fix Price Models; Time to Build (search for similar items in EconPapers)
JEL-codes: C63 D43 E12 E22 E24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-mic
Date: 2004
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Working Paper: Wage Regimes, Accumulation and Finance Constraints: Keynesian Unemployment Revisited (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:fce:doctra:0401

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