TABLE OF CONTENTS This book represents an ongoing research agenda the aim of which is to contribute to the Keynesian paradigm in macroeconomics. A currently dominant research strategy in macroeconomics is based on the dynamic general equilibrium (DGE) model. Its essential features are the assumption of intertemporal optimizing behavior of economic agents, competitive markets and price mediated market clearing through flexible wages and prices.
New Keynesian economics has over recent times, to a large extent, also adopted this framework, even though it makes use of the concepts of monopolistic competition and sticky wages and sticky prices. An excellent example of a fully developed macromodel of this type is the recent work by Woodford, 2003. In contrast to traditional Keynesian macromodels, recent New Keynesian variants also assume dynamically optimizing agents and market clearing.
The research perspective represented by the collection of articles in this book revives the Keynesian perspective. It is well known that the DGE model has not so far been very successful in capturing certain stylized dynamics on labor, product and financial markets. In this book, we attempt to pursue a modeling approach that may help to give a better account of those features. In the current approach we do not assume, as in the perfect competition or monopolistic variants of the DGE model, the clearing of all markets. Although occasionally we assume that some markets may be cleared, for example the financial market, other markets, for example the labor market definitely do...
