This paper examines the link between capital stock and unemployment persistence. An overlapping-generations model with endogenous labor supply and imperfect competition is presented. It is used to interpret the unusual persistence of unemployment in Trinidad and Tobago during the last twenty years. Although real wages are 60 percent lower today than in the mid-1980s, unemployment continues to be very high. The paper argues that an important part of the explanation lies in the decline of capital stock in this country after years of very low savings and investment. Policies to address this capital shortage are discussed.
Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.
In the United States, some populations suffer from far greater disparities in health than others. Those disparities are caused not only by fundamental differences in health status across segments of the population, but also because of inequities in factors that impact health status, so-called determinants of health. Only part of an individual's health status depends on his or her behavior and choice; community-wide problems like poverty, unemployment, poor education, inadequate housing, poor public transportation, interpersonal violence, and decaying neighborhoods also contribute to health inequities, as well as the historic and ongoing interplay of structures, policies, and norms that shape lives. When these factors are not optimal in a community, it does not mean they are intractable: such inequities can be mitigated by social policies that can shape health in powerful ways. Communities in Action: Pathways to Health Equity seeks to delineate the causes of and the solutions to health inequities in the United States. This report focuses on what communities can do to promote health equity, what actions are needed by the many and varied stakeholders that are part of communities or support them, as well as the root causes and structural barriers that need to be overcome.
Balancing theoretical insights with lessons drawn from the experience of many countries, Lindbeck examines employment and unemployment against the background of developed market economies during the past century.
The deep recession and slow recovery of the Canadian economy in the 1980s and the lengthy recession of the early 1990s raised serious questions about economic policy making. The steady worsening of Canadian unemployment rates led some economists to doubt the traditional view that the national economy is by nature self-correcting and to endorse the concept of hysteresis - the idea that the unemployment rate may display no tendency to return to an unchanging natural rate. Such hysteresis would have important and far-reaching implications for economic policy, particularly monetary policy. Jones provides an overview of leading theories of hysteresis and examines international and Canadian evidence from both microeconomic and macroeconomic perspectives. He extends the econometric analysis of hysteresis at both the micro and macro levels and concludes that while there is some evidence of dependence in Canada, the overall picture is not one of hysteresis.
This conference volume deals with one of the most severe economic, social and political problems major European economies face since the early nineties, the problem of lasting high unemployment. Contrary to the current German discussion, solely concentrating on microeconomic explanations and therapy recommendations, this volume presents papers based on various macro-economic points of view, showing different ways out of the employment crisis. Apart from renowned German economists, some well-known international academics participated in the 1998 Berlin symposium, to learn from experience in other countries.The first chapter contains the main standard textbook models and paradigms explaining lasting high unemployment. The question in the second chapter is if it is possible to fight unemployment with the help of macro policy on a purely national basis in the presence of global markets. The third chapter indicates possible effects of misalignments in financial markets on economic growth and employment. The contributions of the fourth chapter present experiences of other countries, which have succeeded in recent years in lowering their unemployment rates. The question at issue is, if these concepts can be transferred to Germany. The topics of the concluding chapter are practical macroeconomic starting points for sustainable employment growth in Europe. The methods contradict supply side arguments for the stabilisation of employment predominant in the German discussion. Attention is focused on relations between the role of monetary and fiscal policy in close conjunction with wage policy. Furthermore it is made evident that in global markets a theoretical macroeconomic concept as a base for sustainable employment is not very promising without enhanced international co-operation. InhaltsverzeichnisInhalt: W. Franz, Macroeconomics and Joblessness: An Introductory Statement - R. Richter, Warum Arbeitslosigkeit? Antworten von Wirtschaftstheoretikern seit Keynes (1936) - J. Priewe, Klassische und keynesianische Arbeitslosigkeit: eine Kritik hybrider Typologien - H.-J. Heinemann, Nationale Beschäftigungspolitik bei globalisierten Märkten? - P. Davidson, Global Macro Policies for Reducing Persistent High Unemployment Rates in OECD Countries - H. Klodt, International Direct Investment: Export of Headquarter Services or Export of Jobs? - A. Juchems / W. Leibfritz, Monetary Conditions and Fiscal Policy. A Comparison over Various Business Cycles and Different Phases of the Business Cycle - P. Winker, Financing Constraints, Output and Employment. Lessons from Theory and Empirical Evidence on the Micro and Macro Level - M. Frömmel / L. Menkhoff, The Informational Efficiency of Financial Markets and Macroeconomic Equilibrium - L. Funk, Labour Market Dynamics in Western Europe and the USA - M. Heise / M. Moersch, Micro and Macro Determinants of Unemployment. A Comparison of Trends in the United States and Germany - A. Heise, Unemployment in Germany and Britain. A Question of Micro-Rigidities or Macro-Obstruction? - D. Hum / W. Simpson / N. Cameron, Reducing Unemployment in an Era of Low Inflationary Expectations to Regain High Employment - A. F. Ott, Effects of a Change in Policy Rules on the Growth of the Economy. Temporary versus Permanent Effects - L. Groot / R. Schettkat, Does Structure jMatter? The Macroeconomics of Unbalanced Growth - E. Nowotny, The Role of Macroeconomic Policy in Overcoming Slow Economic Growth. International Comparisons and Policy Perspectives - C.-L. Holtfrerich, Economic Policy Targeting, Policy Mix and (Un-)Employment - H.-P. Spahn, Central Bankers, Games and Markets. A Critical Assessment of the Microeconomic Optimization Approach in the Theory of Macroeconomic Stabilization - H.-J. Krupp / K. Cabos, The Impact of Monetary Policy on Employment - G. A. Horn, Zur Koordination von Geld- und Lohnpolitik. Eine empirische Analyse für die USA und Deutschland
John Maynard Keynes is the great British economist of the twentieth century whose hugely influential work The General Theory of Employment, Interest and * is undoubtedly the century's most important book on economics--strongly influencing economic theory and practice, particularly with regard to the role of government in stimulating and regulating a nation's economic life. Keynes's work has undergone significant revaluation in recent years, and "Keynesian" views which have been widely defended for so long are now perceived as at odds with Keynes's own thinking. Recent scholarship and research has demonstrated considerable rivalry and controversy concerning the proper interpretation of Keynes's works, such that recourse to the original text is all the more important. Although considered by a few critics that the sentence structures of the book are quite incomprehensible and almost unbearable to read, the book is an essential reading for all those who desire a basic education in economics. The key to understanding Keynes is the notion that at particular times in the business cycle, an economy can become over-productive (or under-consumptive) and thus, a vicious spiral is begun that results in massive layoffs and cuts in production as businesses attempt to equilibrate aggregate supply and demand. Thus, full employment is only one of many or multiple macro equilibria. If an economy reaches an underemployment equilibrium, something is necessary to boost or stimulate demand to produce full employment. This something could be business investment but because of the logic and individualist nature of investment decisions, it is unlikely to rapidly restore full employment. Keynes logically seizes upon the public budget and government expenditures as the quickest way to restore full employment. Borrowing the * to finance the deficit from private households and businesses is a quick, direct way to restore full employment while at the same time, redirecting or siphoning
In this book, Jean-Pascal Benassy attempts to integrate into a single unified framework dynamic macroeconomic models reflecting such diverse lines of thought as general equilibrium theory, imperfect competition, Keynesian theory, and rational expectations. He begins with a simple microeconomic synthesis of imperfect competition and nonclearing markets in general equilibrium under rational expectations. He then applies this framework to a large number of dynamic macroeconomic models, covering such topics as persistent unemployment, endogenous growth, and optimal fiscal-monetary policies. The macroeconomic methodology he uses is similar in spirit to that of the popular real business cycles theory, but the scope is much wider. All of the models are solved "by hand," making the underlying economic mechanisms particularly clear.
Spain has the most serious and persistent unemployment problem in Europe, with an unemployment rate that reached 24.6 percent in early 1994. This paper explores the characteristics of this unemployment problem, its causes, and provides a brief discussion of recent labor market reform measures and their likely Impact. A demographic shift in recent years has produced a large rise in female labor force participation and a decrease in agricultural jobs to which the economy has been unable to adjust. The effects of generous unemployment benefits and the large underground economy may explain 6–12 percentage points of the resulting unemployment, but the remainder must be explained by failures and rigidities in the labor market. The paper presents econometric evidence that unemployment displays hysteresis, and that wages are not responsive to changes in the unemployment rate. This evidence supports the claim that insider-outsider factors and rigidities in the legal structure of the labor market are responsible for much of the high unemployment rate. Recent reforms have improved the functioning of the labor market, but they are unlikely to be sufficient to reduce unemployment to single digit rates without further action.
