Can a Real Wage Decrease Cure Unemployment? A General Equilibrium Analysis for Belgium
In a series of papers (Ginsburgh and Erlich (1984), Ginsburgh and Van der Heyden (1985), Erlich, Ginsburgh and Van der Heyden (1985)), we have tried to assess by how much the real wage should be or should have been decreased in order to ensure short and /or ling run full employment. This short note describes the main ideas lying behind the general equilibrium model built to answer these questions and summarizes the main results.