This 1991 book is a selection of Jacques Drèze's work over the last decade on the topics of lasting unemployment, stagflation and unused capacity. At the theoretical level, the author has contributed to the formulation and analysis of general equilibrium models which allow for price rigidities and excess supply and lend themselves to econometric implementation, thus represents an attempt to integrate micro- and macroeconomics, and to use theory for empirical and policy purposes.
Preface; Acknowledgements; Part I. Overview: 1. Underemployment equilibria: from theory to economics and policy; Part II. Equilibria With Price Rigidities: 2. Existence of an exchange equilibrium under price rigidities; 3. On supply-constrained equilibria; 4. Competitive equilibria with quantity-taking producers and increasing returns to scale; Part III. Efficiency of Constrained Equilibria: 5. Optimality properties of rationing schemes; 6. Values of markets with satiation or fixed prices; Part IV. Public Goods and the Public Sector: 7. Public goods with exclusion; 8. Second-best analysis with markets in disequilibrium: public sector pricing in a keynesian regime; Part V. Price Adjustments: 9. Demand estimation, risk aversion and sticky prices; 10. Stability of a keynesian adjustment process; Part VI. Wage Policies: 11. The role of securities and labour contracts in the optimal allocation of risk-bearing; 12. Wages, employment and the equity-efficiency trade-off; 13. Labour management, contracts and capital markets: some macroeconomic aspects, and conclusions; Part VII. Econometrics: 14. The trade-off between real wages and employment in an open economy (Belgium); 15. A discussion of Belgium unemployment, combining traditional concepts and disequilibrium econometrics; 16. Europe's unemployment problem: introduction and synthesis; Part VIII. Policy: 17. Work-sharing: some theory and recent European experience; 18. The two-handed growth strategy for Europe: autonomy through flexible cooperation; References; Index.