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New Keynesian DSGE Models and the IS-LM Paradigm

Frische, Ulrich; Größl, Ingrid - 2010

New Keynesian DSGE models propose a dynamic and expectational version of the old IS-LM paradigm. Acknowledging that the Taylor rule as a substitute for the LM-curve has its merits we show that standard DSGE models do not model how the central bank achieves its targets. In filling this gap we...

Persistent link: https://www.econbiz.de/10010460484

The Simple Macroeconomics of Fiscal Austerity, Public Sector Debt and Deflation

Palley, Thomas I. - 2010

This paper explores the macroeconomics of fiscal austerity and deflation in an economy with public debt. A binding budget deficit cap destabilizes the economy by turning the government budget into an automatic destabilizer. Public debt helps maintain AD in the presence of deflation because...

Persistent link: https://www.econbiz.de/10010460486

Employment Cycles, Low Income Work and the Dynamic Impact of Minimum Wages. A Macro Perspective

Flaschel, Peter; Greiner, Alfred; Logeay, Camille; … - 2010

In this paper we investigate the macroeconomic consequences of the introduction of an unemployment benefit system and a minimum wage barrier for both skilled and unskilled workers against the background of Goodwin's (1967) model. In the analyzed framework, characterized by free "hiring" and...

Persistent link: https://www.econbiz.de/10010460489

Sustainable Capitalism: Full-Employment Flexicurity Growth with Real Wage Rigidities

Asada, Toichiro; Flaschel, Peter; Greiner, Alfred; … - 2010

In this paper we present a model of flexicurity capitalism that exhibits a second labor market with the government as an employer of first resort, where all workers not employed by firms in the private sector find meaningful employment. We show that the model exhibits a unique interior steady...

Persistent link: https://www.econbiz.de/10010460490

Aggregate Demand, Aggregate Supply, and Endogenous Growth: A Synthetic neo-Kaleckian Model

Palley, Thomas I. - 2010

This paper develops a neo-Kaleckian endogenous growth model that incorporates aggregate supply - demand balance and balance between labor force and employment growth. The paper explicitly models income distribution which is a critical channel whereby unemployment affects investment and growth....

Persistent link: https://www.econbiz.de/10010460491

Managerial Pay (Cadrisme) and the Post Keynesian Growth Model

Palley, Thomas I. - 2010

long run growth outcomes. Third, managerial pay links neo-classical Marxist theory with Post Keynesian growth theory. Neo … theory and firms may choose techniques that lower growth because they increase profits. …

Persistent link: https://www.econbiz.de/10010460492

The alleged stability of the labour share of income in macroeconomic theories of income distribution

Krämer, Hagen - 2010

"law of economics". This paper attempts to show how the alleged stability of the labour share of income became known as one … of the "great magnitudes in economics". It also shows how this "law" made its way into the three major theories of … macroeconomic income distribution, i.e. neoclassical, post-Keynesian, and Kaleckian distribution theory. Since the data show strong …

Persistent link: https://www.econbiz.de/10010460496

Recession Forecasting with Dynamic Probit Models under Real Time Conditions

Proaño, Christian R. - 2010

In this paper a dynamic probit model for recession forecasing under pseudo-real time is set up using a large set of macroeconomic and financial monthly indicators for Germany. Using different initial sets of explanatory variables, alternative dynamic probit specifications are obtained through an...

Persistent link: https://www.econbiz.de/10010460497

The Economics of the Phillips Curve: Formation of Inflation Expectations versus Incorporation of Inflation Expectations

Palley, Thomas I. - 2011

This paper examines the theory of the Phillips curve, focusing on the distinction between "formation" of inflation … expectations and "incorporation" of inflation expectations. Phillips curve theory has largely focused on the former. Explaining the … Phillips curve by reference to expectation formation keeps Phillips curve theory in the policy orbit of natural rate thinking …

Persistent link: https://www.econbiz.de/10010460505

Worker debt, default ans diversity of financial fragility

Charpe, Matthieu; Flaschel, Peter - 2011

This paper presents a model addressing the conditions under which financial instability arises in the event of household debt. The model addresses two main cases. First, household debt is affected by functional income distribution. Second, household debt is affected by credit supply and depends...

Persistent link: https://www.econbiz.de/10010460506