Keynesian unemployment as a nash equilibrium with endogenous wage/price setting: An example |
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Authors: | Paul Madden |
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Institution: | University of Manchester, Manchester M13 9PL, UK |
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Abstract: | A simple 3 good, 1 consumer, 1 firm model of fixed price, quantity constrained equilibrium is developed. A game is then defined on the set of (globally unique) equilibria. The consumer sets the money wage, the firm sets the money price of output (money is numeraire). Nash solutions of the game exist and may involve Keynesian unemployment but never involve Classical unemployment or Repressed inflation. |
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