European Business Schools Librarian's Group

Department of Economics Working Papers,
Vienna University of Economics and Business, Department of Economics

Is the NAIRU theory a Monetarist, New Keynesian, Post Keynesian or a Marxist theory?

Engelbert Stockhammer ()
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Engelbert Stockhammer: Institute for Public Economics, Monetary and Fiscal Policy, Vienna University of Economics & B.A.

Abstract: The NAIRU theory has become the mainstream theory in explaining unemployment in Europe and is often used to justify demands for a cutback of the welfare state, reducing unemployment benefits, reducing minimum wages, decentralizing collective bargaining etc. Close inspection reveals that it nonetheless shares some arguments with Post Keynesian and even Marxist theory. The paper proposes an underdetermined, encompassing NAIRU model, which is consistent with several theoretical tradtions. Depending on the closure with respect to demand formation and determination of the NAIRU itself, the model allows for New Keynesian, Post Keynesian and Marxist results.

JEL-codes: B50; E12; E24 March 2006

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