Working Paper
Keynesian and Monetarist Views on the German Unemployment Problem - Theory and Evidence
Kiel Working Papers, 1096
Authors
Publication Date
JEL Classification
B22
C32
E24
Key Words
Persistently high unemployment rates in Germany have led to a long-running controversy on the causes of the unemployment problem. This paper aims to review the contribution of Keynesian and monetarist theories to this controversy and explores empirically their implications for the explanation of high unemployment in Germany using a structural vector regression approach. In addition, this paper discusses the so-called wage gap which plays an important role in the debate whether the German unemployment problem is a real wage problem. Even though this paper cannot hope to settle the unemployment controversy, it nevertheless shows why a consensus has remained elusive.
