Citation

Discussion Paper Details

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Title: How are Product Demand Changes Transmitted to the Labour Market?

Author(s): Assar Lindbeck and Dennis J. Snower

Publication Date: September 1993

Keyword(s): Demand Management Policy, Employment, Imperfect Competition and Transmission Mechanisms

Programme Area(s): Human Resources

Abstract: In traditional Keynesian and neoclassical models, the transmission of product demand changes to the labour market generally involves wage-price sluggishness or counter-cyclical real wage movements. In practice, however, real wages are often acyclical or procyclical, and wages and prices are flexible in the longer run. This paper examines the main channels whereby product demand can affect employment under these conditions. The analysis suggests that the longer-term effectiveness of demand management policies depends significantly on the availability of a limited number of supply-side transmission channels.

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Bibliographic Reference

Lindbeck, A and Snower, D. 1993. 'How are Product Demand Changes Transmitted to the Labour Market?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=844