Classical and Keynesian Unemployment in the IS-LM Model

  • Jean-Michel Grandmont
Part of the International Economic Association Series book series (IEA)


The recent literature on equilibrium with quantity rationing has cast a new light on the origins and the cures of unemployment. By reconsidering the traditional Keynesian elementary multiplier model, this approach has in particular brought to the forefront of the analysis the important distinction between Keynesian unemployment, which results from a lack of demand, and classical unemployment, which comes from too high a real wage. (The first attempts to model these different sorts of unemployment are due to Solow and Stiglitz, 1968; Barro and Grossman, 1971, 1976; Younès, 1970, 1975; Benassy, 1973, 1975, 1977, 1982a. The term classical unemployment has been coined by Malinvaud, 1977, in his thorough study of a similar model.)


Interest Rate Real Wage Aggregate Demand Excess Demand Good Market 
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Copyright information

© International Economic Association 1987

Authors and Affiliations

  • Jean-Michel Grandmont
    • 1
  1. 1.CEPREMAPParis

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