Possible policy implications of modern underemployment equilibrium theory

Pure Keynesian models are better suited than neoclassical models to restoring equilibrium in severely depressed economies, particularly in the unemployment-plagued Netherlands. Many analyses of today's depressed economy fail to take into consideration the fact that many consumers and producers...

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Bibliographic Details
Published in:De Economist (Netherlands) 1983-01, Vol.131 (3), p.344-372
Main Author: Van Eijk, C. J.
Format: Article
Language:English
Subjects:
Central
Economic policy
Economic theory
Implications
Keynesian theory
Reduction
Underemployment
Unemployment
Online Access:Get full text
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Summary:Pure Keynesian models are better suited than neoclassical models to restoring equilibrium in severely depressed economies, particularly in the unemployment-plagued Netherlands. Many analyses of today's depressed economy fail to take into consideration the fact that many consumers and producers are paralyzed by a fixation on the rationing they feel in their sales markets. Policies should be redirected toward the destruction of the restrictions by which the behavior of producers, consumers, and government is bounded. There has been increased attention since 1981 to an aggressive industrial policy specifically directed toward reindustrialization. The institutions required for the design and implementation of such a policy may be laboring under the conviction that current difficulties are due to market failures that prevent markets from generating and disseminating information that is sufficiently accurate to permit the efficient allocation of production factors.
ISSN:0013-063X
1572-9982
DOI:10.1007/BF01985956