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A Simple Model of Keynesian Unemployment

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  • Tetsuya Nakajima

    (Osaka City University)

Abstract

Constructing a general equilibrium model which compactly incorporates the markets for outputs, labor, money, and equities, we examine equilibrium unemployment. While a mechanism of an efficiency wage brings about nominal wage rigidity, unemployment occurring in our model definitely has Keynesian features. For instance, a reduction in wages rather enhances unemployment through a decrease in consumption. In addition, our paper shows a possibility of Pareto improvement through an increase in unemployment benefits.

Suggested Citation

  • Tetsuya Nakajima, 2005. "A Simple Model of Keynesian Unemployment," Macroeconomics 0502024, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0502024
    Note: Type of Document - pdf; pages: 28. a substantially improved version of ewp-mac/0404039
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    References listed on IDEAS

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    1. repec:bla:scandj:v:100:y:1998:i:1:p:113-41 is not listed on IDEAS
    2. Charles Kahn & Dilip Mookherjee, 1988. "A Competitive Efficiency Wage Model with Keynesian Features," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(4), pages 609-645.
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    11. Mankiw, N. Gregory, 1988. "Imperfect competition and the Keynesian cross," Economics Letters, Elsevier, vol. 26(1), pages 7-13.
    12. Tetsuya Nakajima, 2010. "A Simple Model Of Keynesian Unemployment," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 239-256, May.
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    1. Tetsuya Nakajima, 2010. "A Simple Model Of Keynesian Unemployment," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 239-256, May.

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    More about this item

    Keywords

    Unemployment; Keynesian; Efficiency wages;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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