The Manuscript

The GEM eBook rigorously develops Generalized Exchange Macroeconomics. It is ambitious, intended to reconfigure modern theory. Unlike mainstream modeling, the new approach microfounds the full range of effective stabilization policymaking, while still satisfying the strict methodological standards of the academy.

The GEM Project is a dauntingly-broad work in progress. There are many places for errors to hide. Our hope is that readers will find them. Comments are invited.

The Preface explains the author’s path toward the GEM model class. Download PDF
Chapter 1: Introduction to Generalized Exchange Macroeconomics introduces the generalization of rational exchange from the marketplace to the workplace, including the GEM model’s bedrock Two-Venue Theorem. It summarizes the early roots of workplace-exchange economics and its role in the modern debabte over the coherence and stabilization-relevance of macroeconomics. Download PDF
Chapter 2: Baseline Workplace Equilibrium, constructs the baseline workplace-equilibrium model, microfounding meaningful wage rigidities, capable of suppressing labor-price recontracting, and involuntary layoffs. Robust, nonconvex workplace exchange is derived from utility- and profit-maximizing behavior, axiomatic preferences, and technological constraints that feature costly, asymmetric information and routinized jobs associated with large, specialized firms. Download PDF
Chapter 3: Beyond Baseline Workplace Equilibrium expands the baseline generalized-exchange model to a dynamic, stochastic theory of continuous-equilibrium employment, remarkably free of distorting free parameters. A second class of involuntary employment loss – permanent job downsizing – joins temporary layoffs in enriching the general-equilibrium timepath of unemployment. The GEM model class is further shown to provide a powerful framework for explaining the important macro topics of income distribution and economic growth. Download PDF
Chapter 4: Labor Pricing and Supply focuses on GEM-derived aggregate labor supply and substantially improved wage-price dynamics. The Phillips curve controversy is resolved. Stagflation is likewise explained. Download PDF
Chapter 5: Venue Aggregation, General Equilibrium, and Applications identifies assumptions necessary to support two-venue intertemporal general decision-rule equilibrium. It explores fundamental GEM equilibrium properties – including existence, stability, and uniqueness – setting the stage for construction of stabilization-relevant theorems. The chapter additionally completes Ben Bernanke’s benchmark model of the Great Depression, providing a coherent, continuous-equilibrium framework for understanding extreme instability and broad market failure. The chapter also enriches the analysis of stagnation, with inspiration from Edmond Malinvaud, and identifies the inherent limitations of the ubiquitous search/match/bargain theory. Download PDF
Chapter 6: Workplace-Marketplace Synthesis assembles a compact version of Two-Venue General Equilibrium (TVGE) theory in order to explore its stabilization relevance. It microfounds Keynesian consumption and the profit-seeking management of production capacity. Furthermore, it draws on rational investor inactivity and perceptions of central-bank real-side credibility to explicate episodes of extreme macro instability. Download PDF
Chapter 7: Unions and Collective Bargaining constructs an economic model of unions and collective bargaining. Download PDF
Chapter 8: Economic Modeling of Management elaborates on rational management practices within large firms, helping to reconcile coherent macroeconomics taught in graduate economics programs and the curriculums taught in MBA programs. Download PDF
Chapter 9: Literature on Workplace and Government Exchange provides an overview of the existing literatures on the second and third venues of economic exchange – the large-establishment workplace and government – which are the nonmarket counterparts to the already carefully modeled marketplace exchange. Download PDF
Chapter 10: Monetary Policy and Evidence considers the substantial body of monetary-policy implications of the GEM model class. Download PDF
The Glossary defines the terms, symbols, and acronyms generated in the generalization of rational price-mediated exchange from the marketplace to the large-establishment workplace. Download PDF
The References list the literature cited in the GEM Project. Not surprisingly, it is very long. Download PDF

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