ABSTRACT
However, the common strand in the Keynesian approaches broadly defined is the angst over the performance of the economy, and especially of the labour market. In particular, the Keynesian models assume that the labour markets do not perform well enough to ensure full employment as a continuous or almost continuous state for a variety of reasons. One of the basic reasons for this is that the labour markets cannot be taken to always clear at the current wage rate. They may do so, but not necessarily always, nor is there always a strong and rapid tendency for them to move from a disequilibrium state to the equilibrium one. The latter is related to the observation that the firms and the workers in the labour market do not even negotiate a real wage but rather negotiate and set a nominal wage. Further, there are very significant imperfections in the labour market for various reasons, including the fixity and firm-specificity of acquired skills, the differing geographical distributions of jobs and workers, and explicit and implicit contracts, etc.
