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Über dieses Buch

Interest in business cycles has had its 'ups and downs'. After a period of almost steady state growth and of economic tranquility, when the business cycle seemed to be obsolete, the turbulence of the 70s and 80s has contributedto a renewed interest in the topic. Important analytical and methodological innovations have also favored the present abundance of contributions. Four innovations are of particular importance: i. microfoundations ii. nonlinearities iii. stochastic variables iv. real aspects. Both Classical macroeconomics and new-Keynesian approaches seem to share these characteristics, which apply both to endogenous and exogenous explanations of the cycle. The distance separating the newer literature from its forebears seems vast. Previously, cycle theory was characterized by a macro approach and utilized nonlinearities either through piecewise 'linear models or with the aid of Classical theorems in the field of dynamic systems. To consider and to compare the old and the new literature on business cycles is one of the goals of this book. To narrow the distance separating them is another goal of this research. We do not try to bridge it, but rather to revisit the former tradition with new tools. Finally, a particular emphasis is put on the 'ceilings and floors' type of literature. One of us has written a D. Phil. thesis with Sir John Hicks, and both have worked with H. P. Minsky. Hicks, along with Goodwin, introdu. ced the concept of ceilings and floors into business cycle analysis, and Minsky made important contributions to the area.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract
This book is primarily a critical survey of small-scale, theoretical macro models that attempt to analyze the cyclical behavior of modern economies. Our survey emphasizes the role of the labor market, which is treated very differently in the neo-Classical, neoMarxian and Keynesian models that are concerned with business cycles. We also consider recent business cycle models that are especially concerned with microfoundations.
Piero Ferri, Edward Greenberg

Chapter 2. The Labor Market, Business Cycles, and Economic Instability

Abstract
Theories of business cycles centered upon labor market variables have considered four topics:
i)
the full employment constraint, setting a ceiling to the process of growth;
 
ii)
real wage changes, affecting income distribution and hence the process of accumulation and saving;
 
iii)
wage and price changes, affecting the labor supply;
 
iv)
wage and price dynamics, creating deflationary or inflationary kinds of instability.
 
Piero Ferri, Edward Greenberg

Chapter 3. The Analytical Role of the Labor Market in Long-and Short-Run Models

Abstract
In this chapter we consider the strategic role played by the labor market in differentiating several economic paradigms from both a long-and a short-run perspective. Once the role of the labor market is identified in situations that constitute, respectively, the upper and the lower bound in business cycle studies, it will be easier to understand the strategic role of labor market variables in shaping business cycle models.
Piero Ferri, Edward Greenberg

Chapter 4. Nonlinear Deterministic Labor Market Theories of Business Cycles

Abstract
In the long run, prices and wages are completely adjusted to their equilibrium values, while in the short run they can be assumed as fixed. In a business cycle perspective (and/or in intermediate-run models1), one needs a dynamic specification of how prices and wages change. In this way, the starting point of our analysis of business cycles interfaces with the Phillips curve debate, and one can introduce into the analysis a wage function whose dynamics can be conceived either in real or in nominal terms. Moreover, the models that we have discussed in the last sections of the previous chapter can be generalized in order to include inflation, and different structures are obtained according to the way in which the labor market is specified.
Piero Ferri, Edward Greenberg

Chapter 5. The Mathematics of Nonlinearity

Abstract
In this chapter we consider in a more detailed way the role of mathematical techniques in shaping theories of business cycles, which have been characterized by an increasing use of nonlinearities, with particular reference and applications to the specification of the labor market.
Piero Ferri, Edward Greenberg

Chapter 6. The Labor Market and Stochastic Theories of Business Cycles

Abstract
After the brief excursus into the mathematical domain of nonlinearities, let us reconsider the development of the wage equation, starting with the role of expectations.
Piero Ferri, Edward Greenberg

Chapter 7. Wage-Price Spirals

Abstract
In the model tLat we have considered so far, the wage-price spiral has not played a prominent role, because equilibrium situations have been considered, because only one equation has been taken into account, or because the full impact of the spiral on the nominal values of the other variables has been neglected.
Piero Ferri, Edward Greenberg

Chapter 8. A Regime Switching Model

Abstract
The previous chapters examined two models of wage-price spirals, one of which converges to equilibrium, the other tends to explode. The latter is capable of generating an explosive-inflationary situation whenever the target real demand is rising at a rate greater than productivity growth. Since explosive behavior is rarely observed, it has been argued that such a model is fundamentally incorrect. But the very rapid changes in prices and wages that have been observed (e.g. in the 1970s) have presented difficulties for models that are strongly constrained so as not to produce unacceptable behavior in the long run.
Piero Ferri, Edward Greenberg

Chapter 9. Some Critical Aspects

Abstract
The results of the previous chapters depend fundamentally on three sets of hypotheses:
a)
the wage-price specification;
 
b)
the way in which nonneutrality of the impact of the wage-price spiral on the rest of the system is obtained;
 
c)
the nature of the nonlinearity.
 
Piero Ferri, Edward Greenberg

Chapter 10. Concluding Remarks

Abstract
The theme of the book has been a critical analysis of business cycle models centered around the role of the labor market in those models. The differences between these models, the role played by the different specifications of the labor market, the impact of new analytical tools of analysis and the different implications deriving from the models have been the subject of this book.
Piero Ferri, Edward Greenberg

Backmatter

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