By Peter Flaschel
An severe debate has performed out in recent times concerning find out how to enforce a so-called "flexicurity system"-a hard work industry reform that mixes flexibility, quite within the hiring and firing means of enterprises, with safeguard within the employment and source of revenue of the group. In Flexicurity Capitalism, Flaschel and Greiner lay out the macroeconomic constitution of the program, offering the special mathematical versions essential to give some thought to heavily how this sort of procedure can paintings. Their booklet rests on 3 pillars of notion: Marx, Kalecki-Keynes, and Schumpeter. The authors spotlight the suitable contributions from the paintings of every and construct upon it. They in flip supply a easy framework for flexicurity capitalism after which examine their economy to natural capitalism to figure out the simplest and so much useful means ahead. Their scope is bold: to handle the shortcomings of a slim concentrate on mass unemployment, selective-schooling platforms, estate rights dependent completely on possession with no certified company decision-making services, monetary markets that don't of channel reductions safely into actual funding, and thoughts that forget about human rights or ethical sentiments. Flaschel and Greiner's Flexicurity Capitalism offers critical dialogue and possible mathematical versions essential to think about relocating during this direction.
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Extra info for Flexicurity Capitalism: Foundations, Problems, and Perspectives
Our model, therefore, allows for interesting alternative stability scenarios, depending on the working of the wage-price spiral. This allows Blanchard and Katz type error correction terms, which Chen et al. (2006) found to be relevant in the case of the US economy, and employment policies pursued by ﬁrms in a Keynesian aggregate demand situation in which income distribution and the state of the labor market matter. Moreover, this model type includes interesting steady-state relationships, underlying its dynamics.
This steady-state ratio of capacity utilization is a fairly complicated function of the parameters of the model and thus depends on a variety of exogenous factors in the interaction of goods and labor market dynamics. There are, however, processes on the nominal side of the model that may modify such situations signiﬁcantly. If there is accelerating inﬂation, the interest rate policy pursued by the central bank may not only enforce upper turning points in economic activity but also modify the economy’s steady-state position back to natural rates of employment and capacity utilization, if these rates are known to the central bank.
This provides various scenarios of disequilibrium growth that may nevertheless allow for upper, as well as lower, turning points from a global point of view, that is, that make the considered dynamics economically viable from the global point of view. In the case of a conﬂict-driven economy, order is established only through large ﬂuctuations in economic activity or enforced through economic policy. 8 provides some numerical illustrations of the model. 9 points to some problems on the nominal side of the considered economy that, though they do not feed back into the real dynamics, call for an extension of the model to include interestrate effects on aggregate demand and an active Taylor interest-rate-policy rule as monetary policy, in order to tame the explosive dynamics that exist in the nominal part of the model.