ABSTRACT
In this chapter 1 we use the integrated 5D Kaldor–Tobin model of monetary growth (KT model) introduced in Chiarella and Flaschel (2000a, ch. 7) in order to investigate on this basis the role played by a variety of labor market and employment adjustment processes. We introduce these additional processes in order to give more weight to labor market considerations in an otherwise traditional Keynesian setup of a growing monetary economy. Increasing the weight of labor market adjustments in Keynesian disequilibrium analysis in our view represents an important step forward in the medium- as well as the long-run analysis of the underemployment situations faced in particular by Europe.
