"This paper uses a model with a continuum of equilibrium unemployment rates to explore the effectiveness of fiscal … policy. The existence of multiple steady state unemployment rates is explained by the absence of markets for the inputs to a … high unemployment equilibrium, induced by the self-fulfilling beliefs of market participants about asset prices. Using this …

) do increased government purchases crowd out private consumption? 2) do increased government purchases reduce unemployment … purchases can also reduce unemployment"--National Bureau of Economic Research web site …

This paper presents a theory of the monetary transmission mechanism in an old-Keynesian model with multiple equilibrium … unemployment rates. The model has two equations in common with the new-Keynesian model; the optimizing IS curve and the policy rule …

"This paper presents a theory of the monetary transmission mechanism in an old-Keynesian model with multiple … equilibrium unemployment rates. The model has two equations in common with the new-Keynesian model; the optimizing IS curve and …