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On Persistent Demand Shortages: A Behavioral Approach| old_uid | 10851 |
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| title | On Persistent Demand Shortages: A Behavioral Approach |
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| start_date | 2012/02/10 |
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| schedule | 15h30-16h30 |
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| online | no |
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| location_info | salle 4 |
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| summary | We incorporate two sets of behavioral assumptions (fairness concerns for nominal wages and insatiable desire for money) into a dynamic model of a monetary economy to illuminate how these sets of assumptions can generate persistent aggregate demand shortages. We obtain the condition for persistent unemployment, and that for temporary unemployment, to occur. Policy implications significantly differ between the two cases. A monetary expansion raises private consumption under temporary unemployment but not under persistent nemployment. A fiscal expansion may or may not increase short-run private consumption but crowds out long-run consumption under temporary unemployment. Under persistent unemployment, however, it always increases private consumption. |
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| responsibles | Berestycki, Nadal, Rosenstiehl |
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