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Notes For A New Guide To Keynes (I): Wages, Aggregate Demand, And Employment

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  • Jordi Gali

Abstract

I revisit the General Theory's discussion of the role of wages in employment determination through the lens of the New Keynesian model. The analysis points to the key role played by the monetary policy rule in shaping the link between wages and employment, and in determining the welfare impact of enhanced wage flexibility. I show that the latter is not always welfare improving.
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  • Jordi Gali, 2013. "Notes For A New Guide To Keynes (I): Wages, Aggregate Demand, And Employment," Journal of the European Economic Association, European Economic Association, vol. 11(5), pages 973-1003, October.
    • Handle: RePEc:bla:jeurec:v:11:y:2013:i:5:p:973-1003
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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