Publisher's Synopsis
Excerpt from Cyclical Markups: Theories and Evidence
Real wages are not strongly countercyclical. As pointed out already by Dunlop (1938) and Tarshis this presents difficulties for models in which technological possibilities do not vary at business cycle frequencies. For, why should firms be willing to pay more to workers when output is high and hence the marginal product of labor is low? One obvious possibility, suggested by Keynes is that the desired markup of price over marginal cost is low when output is high.
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