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Macroeconomic stability in a flexible labor market
Author(s) -
Oh Jongseok
Publication year - 2018
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/meca.12207
Subject(s) - flexibility (engineering) , economics , wage , labour economics , new keynesian economics , labour market flexibility , keynesian economics , macroeconomics , unemployment , monetary policy , management
This paper examines the relationship between labor market flexibility and macroeconomic stability from a post‐Keynesian perspective. Considering two aspects of labor market flexibility, employment flexibility and real wage flexibility, I adopt the flex–output model to discuss employment flexibility and extend it by incorporating real wage dynamics induced from a wage–price Phillips curve to discuss real wage flexibility. Simulation of the model suggests that employment flexibility possibly increases instability of an economy whereas real wage flexibility reduces it.

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