Introduction

Abstract

For more than 60 years, since the long depression of the 1920s in Great Britain, the key problem in macroeconomics has been the explanation of unemployment, which is seemingly involuntary and varies with aggregate demand. Most markets seem to clear, but not the labor market. Why? Even in the absence of major real shocks, such as materials shortages, there are large fluctuations in output that seem to be correlated with aggregate demand. Why?