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INTERACTIONS AMONG LABOR, GOODS, AND MONEY MARKETS
Author(s) -
Enke Stephen
Publication year - 1971
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.1467-6435.1971.tb00806.x
Subject(s) - economics , labour economics , investment (military) , law , politics , political science
SUMMARY The analysis relates the labor market, capital market, and money market of an economy in aggregate terms. A feature is that the savings rate from non‐labor income is assumed different (higher) than that from labor income. Consequently, as total employment varies at different wage rates, and total output is redistributed between labor and non‐labor (capital), aggregate savings and investment vary. If the effective ex ante demand for investment and consumption goods exceeds national output, prices rise, effective stock of money declines, interest rates rise, savings increase and demand for investment goods falls. Given human propensities to work, save, hoard, etc., it is shown that the prices on goods, money, and labor all relate in a particular way that should tend to equilibrium. (Assuming different savings rates on different factor incomes means that the traditional savings‐to‐income schedule is a non‐construct.)