A Working Model of Slump and Recovery from Disturbances to Capital-goods Demand in a Closed Non-monetary Economy

Edmund Phelps

Chapter 20 in Nicholas Kaldor and Mainstream Economics, 1991, pp 360-378 from Palgrave Macmillan

Abstract: Abstract This paper is one in a series directed toward the construction, with certain modern building blocks, of a non-monetary theory of employment fluctuation in market economies. The closed-economy model here parallels the open-economy model in Phelps (1988). The objective is a plausible theory that helps to account for some or all of the long swings in economic activity over recent decades. In fact, this non-monetary theory has grown out of one of the models used by Fitoussi and Phelps (1988) to account for the 1980s depression over much of the world, a slump that demand-driven models are hard-pressed to explain.

Keywords: Interest Rate; Capital Stock; Real Wage; Working Model; Real Interest Rate (search for similar items in EconPapers)
Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-10947-0_20

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DOI: 10.1007/978-1-349-10947-0_20

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