Wage Regimes, Accumulation and Finance Constraints: Keynesian Unemployment Revisited

42 Pages Posted: 19 Nov 2003

See all articles by Francesco Saraceno

Francesco Saraceno

Observatoire Francais des Conjonctures Economiques, Paris (OFCE)

Date Written: September 12, 2003

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

JEL Classification: C63, D43, E12, E22, E24

Suggested Citation

Saraceno, Francesco, Wage Regimes, Accumulation and Finance Constraints: Keynesian Unemployment Revisited (September 12, 2003). Available at SSRN: https://ssrn.com/abstract=470482 or http://dx.doi.org/10.2139/ssrn.470482

Francesco Saraceno (Contact Author)

Observatoire Francais des Conjonctures Economiques, Paris (OFCE) ( email )

69 Quai d'Orsay
75007 Paris
France

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