By Shinji Ido
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Extra info for An Aspect Marking Construction Shared by Two Typologically Different Languages
Accordingly, as is well known, any misperception of the price level leads to deviation from equilibrium—in this case, for example, the real wage might be too low, with workers underanticipating inflation, and employment levels too high. These examples are highly significant. Whilst one, the theory of real business cycles, focuses on the supply-side (productivity shocks or whatever), another, that of Lucas, focuses on the demand-side through monetary and informational factors, and the third, of search and match, focuses on the interaction of supply and demand, they are generally considered to be extreme for limiting themselves to circumstances in which the market works effectively, if not always ideally, as a result of random and unforeseeable events beyond the scope and immediate control of the market.
The coexistence of increasing unemployment and inflation could be explained, where The macroeconomics of labour markets 27 previously there had only been a trade-off, as in the Phillips curve, by the use of self-fulfilling expectations. Initially, this took the simple, adaptive form of explaining expectations of the future price level in terms of existing inflation—in effect, explaining inflation by inflation even if indirectly through expectations. As a consequence, however, the way was opened up for more sophisticated theories, not of inflation as such, but of the way in which expectations are formed.
This involves, respectively, identifying shifts in exogenous parameters, which raise the natural rate of unemployment, and the transmission mechanisms through which exogenously given shocks move the economy around a given natural rate. The macroeconomics of labour markets 37 Despite the scale and persistence of unemployment, there have been theories to suggest that it has arisen because the market has worked well. Real business-cycle theory, for example, argues that individual agents respond to shocks by adjusting their intertemporal allocations.
An Aspect Marking Construction Shared by Two Typologically Different Languages by Shinji Ido