Premium
KEYNES' WAGE–PRICE DYNAMICS
Author(s) -
Dos Santos Ferreira Rodolphe,
Michel Philippe
Publication year - 2013
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2012.04165.x
Subject(s) - economics , unemployment , wage , aggregate demand , aggregate (composite) , keynesian economics , aggregate supply , simple (philosophy) , econometrics , demand for money , conjecture , macroeconomics , monetary policy , labour economics , mathematics , philosophy , materials science , epistemology , composite material , pure mathematics
The paper presents a simple loglinear macroeconomic model designed to discuss the essentials of Keynes' dynamic analysis in the General Theory and in the Treatise on Money . The model has a conventional static Aggregate Demand—Aggregate Supply block plus a three‐dimensional dynamic system involving the money wage and the expected level and rate of change of the output price. It illustrates Keynes' ideas, in particular on the nature of unemployment and on the stabilizing nature of money (as opposed to real ) wage stickiness. It also allows to reconcile with empirical observations Keynes' (false) conjecture on the negative correlation of money and real wages.