CONTROLLABILITY AND EQUILIBRIUM-ANALYSIS OF THE INTERACTION BETWEEN THE UNEMPLOYMENT LEVEL AND RELATED GOVERNMENT EXPENDITURE

This paper studies the controllability and stability of the equilibriu m in economic models that relate the unemployment level to government expenditure. The interesting cases when the government expenditure is either bounded or a linear function of the national income are specifi cally considered The relationships between both variables-namely, unem ployment growth level and government expenditure-are obtained by consi dering a Keynesian static model for the national income as well as a d ifferential unemployment-inflation model of the Phillips type. Both mo dels are used to derive a new combined one by eliminating the common v ariable 'taxes', which is driven by investment and government expendit ure.