Notes for a New Guide to Keynes (I): Wages, Aggregate Demand, and Employment

Jordi Galí

NBER Working Paper No. 18651
Issued in December 2012
NBER Program(s):   EFG   ME

I revisit the General Theory's discussion of the role of wages in employment determination through the lens of the New Keynesian model. The analysis points to the key role played by the monetary policy rule in shaping the link between wages and employment, and in determining the welfare impact of enhanced wage flexibility. I show that the latter is not always welfare improving.

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Document Object Identifier (DOI): 10.3386/w18651

Published: NOTES FOR A NEW GUIDE TO KEYNES (I): WAGES, AGGREGATE DEMAND, AND EMPLOYMENT Jordi Gali Article first published online: 12 SEP 2013 DOI: 10.1111/jeea.12032 © 2013 by the European Economic Association Issue Journal of the European Economic Association Journal of the European Economic Association Volume 11, Issue 5, pages 973–1003, October 2013

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