By introducing wealth preference to a dynamic macroeconomic model, instead of those market distortions, we can deal with the secular deficiency of aggregate demand and a discrepancy between fl ow and stock variables.

We examine the effect of immigration on the host country in the dynamic model that can deal with secular unemployment. Immigration has contrasting effects, depending on the economic state of the host country. If there is unemployment, immigration worsens unemployment and decreases consumption by...