 A Kaleckian Alternative to the New Consensus on Monetary Policy and Wage Bargaining: Trying to Make Sense of the NAIRUChapter 16 in Money, Distribution Conflict and Capital Accumulation, 2008, pp 133-152 from Palgrave Macmillan Abstract: Abstract The idea of a NAIRU is at the core of modern New Keynesian and New Consensus models of monetary policy analysis.2 In these models the NAIRU is determined by structural factors of the labour market, the wage bargaining process, and the social benefit system. Due to ‘micro-founded’ rigidities, short-run unemployment determined by the goods market may deviate from long-run equilibrium unemployment given by the NAIRU. However, New Keynesian and New Consensus models suppose a perhaps slow, but stable adjustment mechanism of the actual unemployment rate to the NAIRU, either through a real balance effect or through a monetary policy reaction function. A downward-sloping Phillips curve is valid in the short run, but in the long run effective demand and hence monetary policies have no effect on the NAIRU, and the long-run Phillips curve becomes vertical again. All that monetary policy can do is stabilize output and employment in the short run and stabilize inflation in the long run (Fontana/Palacio-Vera 2005). Keywords: Monetary Policy; Central Bank; Real Interest Rate; Capacity Utilization; Nominal Interest Rate (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-59560-6_16 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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