A General Equilibrium Macro Model with Wage Bargaining.

In a general equilibrium macro model with wage bargaining, agents are divided into capitalists and workers. The markets for produced goods and money are competitive, but the wage rate is determined by negotiation between an employers' union and a trade union. Unions are supposed to be "long sighted" and care about members' utilities in stationary states. Nash bargaining equilibria are characterized by unemployment for certain parameter values. This unemployment is persistent in the sense that it appears in an equilibrium with endogenous prices. A neutrality result for monetary policy is also shown. Copyright 1990 by The editors of the Scandinavian Journal of Economics.