This paper develops a simple three equation microeconomic model to explain the dynamics of output, unemployment and inflation for the U.S.A. The model is estimated, with the annual data, for 1946-1989. Insights gained through some recent developments are used to specify and estimate the model.

In the empirical literature of the new classical model and its criticisms, the unemployment equation received much attention. In this paper we shall examine the validity of the new classical policy ineffectiveness proposition, using the output equation. Non-nested hypothesis tests are used to...

This paper estimates a disaggregated disequilibrium goods market model with rational expectations for the U.S.A. Both the new classical equilibrium model and the alternative Keynesian model with sluggish price adjustment are nested within this approach. Therefore likelihood ratio tests are used...