AN APPROACH TO A UNIFIED MICRO‐MACRO ECONOMIC MODEL*

Donald W. Katzner and Sidney Weintraub

Kyklos, 1974, vol. 27, issue 3, 482-510

Abstract: A tentative unified micro‐macro model is developed to explain the persistent inflation‐unemployment morass by replacing the competitive endogenous money wage theory with the exogenous facts of collective bargaining. Inferentially, a feasible Incomes Policy would alleviate inflation while reserving monetary and fiscal policy to sustain full employment. The aggregative Keynesian macromodel developed builds on Walrasian, Marshallian, and monopoly micro‐foundations. Wage‐share constancy, which also underlies Cobb‐Douglas macromodels, provides a simplifying hypothesis with empirical underpinning for mark‐up pricing. ‘Cost‐push’ and ‘demand‐pull’ as distinctive inflation forces appears generally spurious. Both forces have common roots in excessive money wage increases.

Date: 1974
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