This paper develops a model with multiple steady states (low tax and unemployment rate versus high tax and unemployment … European unemployment rates observed during the seventies. The explanation given is that even if the unemployment rate would … decrease it can only do so gradually because of matching frictions which in turn implies that the tax burden remains high and …

reßected by an increasing returns to scale matching function, which may imply an indeterminate equilibrium. Hence, the model is … capable to generate business ßuctuations, driven by self-fulÞlling belief, characterised by unemployment persistence. A …

general equilibrium model that integrates a theory of equilibrium unemployment into a monetary model with nominal price …