Keynesian or Classical Unemployment in West Germany? — An Empirical Analysis with a Disequilibrium Model —

Abstract

Since the mid-seventies the labour market of the Federal Republic of Germany is marked by persistently high unemployment. Macroeconomically, the most prominent candidates competing for the explanation of unemployment are insufficient demand for domestic goods (Keynesian unemployment) and too high wage costs (classical unemployment). The significance of these two approaches can be tested with econometric disequilibrium models.