Abstract
In the current section, we shall assume slow money wages. The short-run equilibrium and the long-run equilibrium have been derived above, cf. sections 2 and 3. As a fundamental result, under both flexible and fixed money wages, the long-run equilibrium is unstable, as has been demonstrated in sections 4 and 5. As a consequence, under slow money wages, the long-run equilibrium will be unstable, too. This outcome is in sharp contrast to the conclusions drawn in the basic model, where the long-run equilibrium turned out to be stable. That is to say, the public sector creates long-run instability.
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© 1992 Physica-Verlag Heidelberg
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Carlberg, M. (1992). Slow Money Wages. In: Monetary and Fiscal Dynamics. Studies in Contemporary Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-642-47689-1_21
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DOI: https://doi.org/10.1007/978-3-642-47689-1_21
Publisher Name: Physica-Verlag HD
Print ISBN: 978-3-7908-0619-9
Online ISBN: 978-3-642-47689-1
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