Structural Depression: Unemployment, Interest Rates, and Assets in Modern Equilibrium Theory

Author: (USA) Phelps
Publisher:
Publish Date: 2003-01-01
Features: Unlike the explanations of the business cycle by the Keynesian school, the monetarist school, and the real business cycle school, Professor E.S. Phelps proposes a highly distinct theory in this book to explain the long-term unemployment problem that has plagued the economies of the United States and Europe since the 1970s. The author explores the impact of real demand and supply shocks—such as capital stock, oil, the level and rate of technological progress, tax structures, tariffs, overseas real interest rates, and real exchange rates—on the equilibrium employment path under a framework of intertemporal general equilibrium by constructing models of labor turnover and training in closed and open economies, as well as a two-sector fixed investment model. Using time-series data from post-war countries for econometric research, the findings tend to support the structuralist theory of the natural rate of unemployment proposed in this book. The book presents a completely different approach from the new neoclassical and mainstream Keynesian paradigms in clear and fluent language, constructing a comprehensive macroeconomic theoretical system. It is suitable for scholars studying cutting-edge macroeconomic issues and economists conducting macroeconomic analysis.