Business Cycles and Wage Bargaining.

This paper deals with a simple, Keynesian growth model. The main issue is whether Nash bargaining about wages may help to avoid cycles. Our result comes somewhat in the negative: Cycles may still persist. Their existence or emergence is related to violent investment behavior near the long-run, steady-growth path. Thus the prospects for sustained, stable growth appeat to hinge on whether intended investment near equilibrium is dominated by the realized savings or not.