Chapter 29

Controversies in Macroeconomics 2: The Nature of Unemployment

In this chapter, we conclude the book by reviewing controversies over the nature of unemployment during recent decades. Parties to the debates have been the New Classical Economists and Keynesians, including a rather varied group who think of themselves as "New Keynesians." The discussion is ongoing, but we point out several important insights and practically useful points that economists have learned as a result of the discussion. In this the discussion seems a good example of the Reasonable Dialog of Economics as a whole.

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You Need To Know

Although, as the last chapter in the book, this chapter draws in some ways on all the preceding ones, the discussion is fairly self-contained. Essential background is contained in The Neoclassical Approach in Economics, Measuring the National Economy, Supply and Demand. and Macroeconomic Problems. If you are skipping past chapters 20-26, you might find it helpful to read the Background Summary of Chapters 21-24 that accompanies Ch. 25. Topics from Efficient Allocation of Resources and Government and Efficiency: Public Goods and Externalities could also be useful background, but have a fairly heavy overhead of material from earlier microeconomics chapters, and are optional.

Contents

  1. Introduction
  2. The Issue of Unemployment
  3. Search
  4. Job Search
  5. Two Issues
  6. New Classical Prescription
  7. Some Evidence
  8. Job Search and Unemployment
  9. Unemployment Dynamics
  10. Dimensions of Job Search
  11. An Example of Job Search
  12. Job Search and Efficiency
  13. Discouraged Workers
  14. Job Search and Market Equilibrium
  15. What To Do About Unemployment
  16. Summary on Macroeconomics and on the New Classical Contribution
  17. Chapter Summary
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