Abstract
A hysteresis equation is proposed in which changes in inflation depend on the rate of change of employment. To justify this equation it is assumed that wage claims are fixed by insiders, that the workers' bargaining strength is inversely related to the fear of losing their Jobs, and that the latter increases when employment decreases. Then it is argued that the NAIRU need be neither unique nor stable. It is also shown that if trade unions exist which strive to stabilize the rate of unemployment, the workers' militancy can be influenced in such a way that a stable inflation is compatible with a constant and path-dependent rate of unemployment. Lastly the Keynesian implications of the analysis, both theoretical and political, are highlighted.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
