No . 99 Macroeconomic Regimes Business Cycle

The disequilibrium framework is extended to account for investment-savings imbalances that are likely to affect capital accumulation. A simple graphical analysis is put forward to analyse the additional regimes arising out of this imbalance and different adjustment mechanisms are discussed. These different regimes are compared with existing business cycle theories, showing that this framework does allow to analyse approaches as different as Keynesian, Classical and Austrian business cycle theories. Finally, these regimes are used to put forward an alternative explanation for the dynamics of European unemployment and the possible persistent effects of misperceptions by policy makers. 1 Ekkehard Ernst, Center for Empirical Macroeconomics, Department of Economics, University Bielefeld, Universitätsstr. 25, 33615 Bielefeld, Germany; CEPREMAP, 142, Rue du Chevaleret, 75013 Paris, France; e-mail: [email protected]. The views expressed in this paper are those of the author and do not necessarily reflect those of the CEM or the CEPREMAP. 2 Engelbert Stockhammer, Vienna University of Economics, Department of Economics, VWL 1, Augasse 4-6, 1090 Wien, Austria E. Ernst: Macroeconomic Regimes 1