New PDF release: The Unbalanced Economy: A Policy Appraisal

By Ciaran Driver

ISBN-10: 1137271795

ISBN-13: 9781137271792

ISBN-10: 1349327514

ISBN-13: 9781349327515

During the Eighties Britain grew to become one of many world's so much market-oriented economies, an method which ended in 3 serious recessions and a deepening measure of inequality. This booklet argues rebalancing of the economic system will stay elusive till proactive rules are applied on the company and commercial level.

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Additional info for The Unbalanced Economy: A Policy Appraisal

Example text

However if the labour share is fixed in the model, as is often assumed, it cannot affect equilibrium unemployment. The reason why price elasticity of demand features in both Level 1 and 3 is that it influences both the price mark-up on wage costs, and the wage mark-up on benefits. The latter influence arises because a lower (absolute) elasticity implies a lesser effect on profit from a higher bargained real wage. In the end, the NAIRU only depends on bargaining strengths, the labour share, the benefit level and price elasticity.

Nevertheless by the early 1980s, unemployment had clearly risen to levels that were worrying even to a doctrinaire government. 1 – quite outside post-war experience and was more on the scale of the rises seen in the early 1920s and 1930s. Moreover as can also be seen, this was accompanied by a further spike in the rate of domestic inflation. For academic economists the challenge was to explain unemployment in an inflationary situation and, at least in the UK, it became evident that some rudimentary institutional context of labour markets needed to be added to the theory.

While the data from both sources has been much used in studies of cross country growth, it is less helpful for the current comparisons than those supplied by the OECD who estimate Purchasing Power Parities (PPPs) on the basis of the price structures of the member economies, the majority of whom have similar and high levels of GDP per capita. These latter data are used by the Office for National Statistics (ONS) to create annual comparisons of productivity levels. 13 for the G7 economies in 2010.

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The Unbalanced Economy: A Policy Appraisal by Ciaran Driver


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