Keynesian Unemployment is Involuntary and is an Equilibrium State

Bruno Jossa

Chapter 11 in The Notion of Equilibrium in the Keynesian Theory, 1992, pp 120-137 from Palgrave Macmillan

Abstract: Abstract After the appearance of Modigliani’s celebrated 1944 article, which made one of the most decisive contributions to the ‘neo-classical synthesis’ of Keynesian theory, the opinion which came to prevail among economists was that Keynesian unemployment could be accounted for as the result of a basic maladjustment of the supply of money to the level of money wages (see Modigliani, 1944). At first, following Modigliani’s approach, a distinction was made between the ‘basic case’, where unemployment was assumed to stem from the above-mentioned monetary disequilibrium, and the ‘special case’, where employment was thought to be determined by the liquidity trap; but after the introduction of the ‘real balance effect’ into the model, the special case was dismissed and consequently, the conclusion prevailingly drawn was that ‘the critical assumption in Keynes’s theory is that wages are rigid downwards’ (Leijonhufvud, 1969, p. 49).

Keywords: Labour Supply; Trade Union; Real Wage; Relative Wage; Imperfect Competition (search for similar items in EconPapers)
Date: 1992
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-22086-1_11

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349220861

DOI: 10.1007/978-1-349-22086-1_11

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().