Potential Consequences of a Change in Money Wage Under Keynesian Macroeconomics Theory
DOI:
https://doi.org/10.54097/zsb2gg72Keywords:
Ceteris paribus; Exogenous; Endogenous; Ignoratio ElenchiAbstract
This research paper has delved into wage dynamics and economic health. The author has chosen to juxtapose the Keynesian macroeconomics theory with that of the classical, aiming to critically examine the contrasting viewpoints of classical and Keynesian economic theories. The core of the analysis hinges on the Keynesian framework introduced by John Maynard Keynes, particularly with its stance on the implications of changes in nominal wage on the broader economy. Historical instances witnessing substantial wage fluctuations serve as real-world examples to substantiate the theoretical discussions, intending to uncover the causal factors and subsequent economic responses to these wage changes. To further bolster the inquiry, the study employs macroeconomic mathematical modelling to furnish quantitative insights that elucidate Keynesian assumptions on the labour market and its implications. By concentrating on the macroeconomic repercussions of nominal wage changes, as opposed to microeconomic consequences, this paper sheds light on the broader implications of wage adjustments in an economy, underpinned mainly by Keynesian perspectives.
Downloads
References
Japan monthly earnings, Japan Monthly Earnings, 1971 – 2023 | CEIC Data. Available at: https://www.ceicdata.com/en/indicator/japan/monthly-earnings
Hamada, K., Kashyap, A.K. and Weinstein, D.E. eds, Japan's bubble, deflation, and long-term stagnation. MIT Press, 2011: 5-7
Okina, K., Shirakawa, M. and Shiratsuka, S. The asset price bubble and monetary policy: Japan’s experience in the late 1980s and the lessons. Monetary and Economic Studies (special edition), 2001, 19(2):395-450
Stone, D. and Ziemba, W.T. Land and stock prices in Japan. Journal of Economic Perspectives, 1993, 7(3):149-165,
Funck, C, When the bubble burst: Planning and reality in Japan's resort industry. Current Issues in Tourism, 1999,2(4):333-353
Colombo, J, Japan’s bubble economy of the 1980s. Forbes column, 2012:10-14
Kuroda, S. and Yamamoto, I., Wage fluctuations in Japan after the bursting of the bubble economy: downward nominal wage rigidity, payroll, and the unemployment rate. Institute for Monetary and Economic Studies, Bank of Japan, 2005: 20-24
Herr, H the labour market in a Keynesian economic regime: theoretical debate and empirical findings. Cambridge Journal of Economics, 2009,33(5):949-965,
Kryńska, E. and Kopycińska, D, Wages in Labour Market Theories. Folia Oeconomica Stetinensia, 2015, 15(2): 6-8
Gordon, D.F, A neo-classical theory of Keynesian unemployment. Economic Inquiry, 1974, 12(4): 431
Blanchard, O. and Galí, J, Labor markets and monetary policy: A new Keynesian model with unemployment. American economic journal: macroeconomics, 2010,2(2):1-30,
Pigou, A., Mr. JM Keynes' General theory of employment, interest, and money. Economica,1936,3(10):115-132,
Jahan, S., Mahmud, A.S. and Papageorgiou, C. What is Keynesian economics. International Monetary Fund, 2014,51(3:53-54.
Hein, E. and Stockhammer, E, A post-Keynesian macroeconomic model of inflation, distribution, and employment. A modern guide to Keynesian macroeconomics and economic policies, 2011:112-136,
Elsby, M.W. Evaluating the economic significance of downward nominal wage rigidity. Journal of Monetary Economics, 2009, 56(2): 154-169,
Altonji, J.G. and Devereux, The extent and consequences of downward nominal wage rigidity, P.J, 1999: 13-15.
Blanchard, O. and Galí, J. Real wage rigidities and the New Keynesian model. Journal of money, credit and banking, 2007, 39:35-65.
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
