On capital shortages and European unemployment: a panel data investigation

In view of the little attention that the relationship between capital stock and unemployment has received, this paper aims at exploring the relationship between those two variables. A Post Keynesian framework comprising a set of demand-side variables provides the basis on which the econometric investigation is conducted In this context, the application of panel data analysis to EU countries provides evidence on this hitherto untested issue. In so doing, it also explores the extent to which the emergence of the new economic orthodoxy in Europe may be held responsible for the dire state that European labor markets are currently in.