unionization and labor market institutions in advanced capitalism 1950 1985 this article examines the depedence of unionization on labor market institutions and long run trends in inflation unemployment and the sectoral composition of the labor force in 18 oecd countries the large number of contending explanations highlights the difficulty in comparative sociology of drawing confident conclusions when there are few cases to compare this problem is addressed through diverse evidence a review of the comparative historical record and a time series analysis to form a bayesian prior distribution which is combined with a cross sectional data set to sharpen conventional estimates of economic and institutional effects this analysis indicates working class organization in trade unions expanded in the postwar period where labor acquired an institutional influence over capitalist labor markets

implications of economic interdependence for endogenous wage indexation decisions this paper shows how economic interdependence affects the indexation decisions of atomistic wage setters in an environment in which monetary authorities do not observe stochastic disturbances before making their policy choices if stochastic disturbances are common across countries interdependence has no effect on equilibrium indexation choices in identical countries however if disturbances are country specific numerical simulations show that interdependence is likely to reduce equilibrium indexation choices relative to a small open economy we also show that indexation choices may be either strategic complements or strategic substitutes but that strategic complementarity becomes more likely as the degree of interdependence rises

factor shares and inequality in the uk trends in factor shares in both national and household income are estimated from the national accounts and compared to those derived from the fes household survey in order to obtain more reliable measures of the contribution of changes in factor shares to the contemporary growth in income inequality the national accounts indicate that upward trends in the shares of investment related and self employment incomes have contributed directly to the rise in inequality during the past 20 years though to a generally secondary extent until 1986 at least the paper outlines the importance and the difficulty of including appropriate measures of capital gains and private benefit income in estimates of household investment related income whether the national accounts or household surveys are used for evidence indicating the continuing value of national income shares as a guide to the longer run implications of factor shares for inequality copyright 1996 by oxford university press

does monetary unification lead to excessive debt accumulation abstract if discretionary monetary policy gives rise to an inflation bias monetary unification boosts the accumulation of public debt the additional debt accumulation harms welfare if governments are sufficiently myopic in the presence of myopic governments debt ceilings play a useful role in avoiding excessive debt accumulation in a monetary union and allowing a conservative independent central bank to focus on price stability with supply shocks monetary unification results in excessive variability of public debt a debt target that constrains stabilization policy helps to prevent this

fiscal policy coordination with demand spillovers and unionised labour markets we explore the incentives for governments to cooperate by expanding expenditure we have three countries two are in a monetary union the emu the labour markets of both the emu countries are unionised and there is involuntary unemployment in equilibrium we explore the intra and intercountry effects of changes in bargaining power we then examine optimal government expenditures in each emu country we find that there is a positive spillover and that expenditures are strategic complements the coordinated equilibrium involves higher expenditure than the uncoordinated equilibrium

the impact of minimum wages on youth employment in portugal textabstractfrom january 1 1987 the legal minimum wage for workers aged 18 and 19 in portugal was uprated to the full adult rate generating a 49 3 increase between 1986 and 1987 in the legal minimum wage for this age group this shock is used as a natural experiment to evaluate the impact of the minimum wage change on teenagers employment by using a large firm level micro data set it is shown that by comparing the employment growth of 18 19 year old workers with their 20 25 year old counterparts one can identify the employment effects of the minimum wage hike the same comparisons are done with 30 35 year old workers this study finds that the rise in the minimum wage significantly reduced employment this conclusion is reinforced by evidence showing that these employment effects are concentrated in firms more likely to be affected by the change in the law

lobbying by capital and labor over trade and labor market policies abstract this paper uses the common agency approach to analyze the joint determination of product and labor market distortions in a small open economy capital owners and union members lobby the government on both tariffs and minimum wages while other factors of production are not organized the paper shows that product and labor market distortions always move in the same direction and that their level is not modified by social pacts between capital and labor it also shows that labor market distortions are second best hence conditionality by foreign organizations should target distortions in product markets but not in labor markets

the supply and demand for exports in israel abstract using annual data for israel over the period 1960 1989 we estimate an econometric model for the supply and demand for exports a novel feature is that domestic absorption crowds out export supply exports are imperfect substitutes in world markets for tradeables produced abroad the price elasticity of demand is about 1 3 while the price elasticity of supply is about 1 5 the model is simulated to calculate the effects of policy instruments and other exogenous variables on exports and export prices

rules and discretion with noncoordinated monetary and fiscal policies the time inconsistency of optimal monetary policy is due to the effects of tax distortions thus the issue of how to improve upon the time consistent suboptimal monetary policy is related to that of the coordination of monetary and fiscal policy we present a model with three players the central bark the fiscal authority and wage setters in which distortionary taxes are explicitly modelled we show that binding commitments to monetary rules are not necessarily welfare improving if monetary and fiscal policy are not coordinated we also examine the effects of different degrees of independence of the central bank

macroeconomic policy in a two party system as a repeated game this paper considers the interaction of two parties with different objectives concerning inflation and unemployment and rational and forward looking wage setters if discretionary policies are followed an economic cycle related to the political cycle results in equilibrium this cycle is significantly different from the traditional political business cycle reputational mechanisms due to the repeated interaction of the two parties and the public or commitments to a common policy rule can improve upon the discretionary outcome by reducing or eliminating the magnitude of the economic fluctuations

central bank independence and public debt policy the various proposals for the institutional design of the european monetary union have drawn fresh attention to the link between monetary and public debt policies this paper explores the strategic interaction between fiscal authorities setting public debt and the central bank controlling monetary policy in the absence of political distortions an optimally designed conservative independent central bank is sufficient to establish the second best in the presence of political distortions or with coordination of monetary and fiscal policy however also a debt target is needed

the economics of worldwide stagflation the last fifteen years have witnessed dramatic changes in economics not only in the manner in which the economics profession views economics but also in the manner in which the general public views economics and economists by the late 1960 s there had emerged more or less a consensus macroeconomic framework that is an agreed upon structure to be used to study economic problems at the aggregate level robert solow stated as quoted in leijonhufvud 1968

the political economy of government domestic expenditure in the affluent democracies 1960 80 despite the large number of studies of the determination of government expenditure in the affluent democracies most students of the subject admit that we know relatively little about the complex dynamics of spending change using multiple regression analyses of changes in nonmilitary outlays over the years 1960 to 1973 and 1973 to 1980 this study attempts to remedy some of the problems in the literature by providing new tests of several old hypotheses by introducing and testing several relatively new hypotheses and by evaluating such propositions in the context of an integrated theoretical framework and of analyses that span two distinct political economic eras results suggest that the dynamics of domestic expenditure change are partially conditioned by macroeconomic and political environments of particular eras overall the self interests and ideological preferences of policymakers the institutional and extrainstitutional political action of policy relevant groups and needs for state assistance emerge as principal sources of changes in domestic expenditure

who wants an independent central bank monetary policy making and politics the costs and benefits of cooperative monetary and fiscal policy are analysed in the framework of a partisan business cycles model it is shown that political parties with different ideologies prefer to choose different arrangements for macroeconomic policy making more specifically right wing parties favour independent central banks more than left wing parties an independent central bank is also the generally preferred option from a social welfare point of view in addition the form of policy making arrangements between the fiscal and monetary authorities is shown to influence the extent of partisan cycles

the anti inflationary influence of corporatist structures and central bank independence the importance of the hump shaped hypothesis many studies have found strong negative correlations between central bank independence and inflation but the casual significance of this relationship is often challenged we find that the negative relationship remains even when a number of other explanatory variables are considered special attention is given to the role of corporatism following calmfors and driffell it is argued that both high and low levels of centralization should be associated with lower inflation we present empirical support for his hump shaped hypothesis and find that the inclusion of corporatism does not diminish the significance of central bank independence

can reputation resolve the monetary policy credibility problem abstract this paper addresses three problems with reputational equilibria in the barro gordon monetary policy game the multiplicity of equilibria the coordination problem and a chisel prone credibility problem a chisel proof credibility condition ensures that in response to a small deviation from the low inflation rate by the central bank it never pays for the private sector to acquiesce if the private sector can coordinate then a low but nonzero inflation outcome can be supported as a subgameperfect and chisel proof credible noncooperative equilibrium for an atomistic private sector the result can still hold in a game between successive monetary administrations

what caused the rise of conservatism a french view conservatism daniel cohen existing theories of political cycles fail to provide an adequate explanation for the widespread shift to conservative economic policies on one view political parties merely court the median voter but this theory is incomplete because it fails to explain why the median voter has become conservative other theories differentiate parties by their ideologies but they wholly fail to explain where changes of ideology come from this author proposes an explanation that does not need to rely on changes in the underlying preferences of voters or parties but in which changing economic conditions lead to different policy choices thus while ends remain unchanged the means to achieve these ends may vary over time the distinction between right and left is still portrayed by the classical trade off between economic efficiency and equity in order to promote equity the government can always redistribute wealth but in order to preserve economic efficiency wealth redistribution should not be expected to be repeated systematically hence the median voter will prefer a laissez faire to an interventionist government when the economy is understood to be affected by a persistent disturbance and the converse when disturbances are temporary thus the shift to conservatism is seen as the result of the sometimes belated realization by the electorate that the shocks of the 1970s were long lasting current forecasts that unemployment in europe is unlikely to fall suggest the continuation of conservative policies irrespective of whether they are implemented by the right or the left

can we afford to grow older population aging and social security over the past decade many governments have been attempting to reduce current and future planned expenditure on social security in justifying these reductions great stress has been laid on the projections of increasing dependency ratios that will result from population aging especially as the post war baby boom generation reaches retirement age in the early part of the next century indeed some commentators have referred to a world crisis in social security rosa 1982 it seems as if those demographers who have not been fully occupied in arguing that rapid population growth constitutes a major threat in one part of the world are warning that fertility decline constitutes a serious issue for the rest admittedly the expenditure projections look serious in the united states the medicare fund is expected to go into deficit in the 1990s and remain in deficit thereafter while projections by the fund s trustees suggest that old age survival and disability insurance oasdi benefits will exceed the revenues from the scheduled oasdi payroll tax rate of 12 4 in every year after 2015 levy 1984 in the united kingdom expenditure on state pensions was expected to rise from f 15 4 billion in 1984 85 to between f36 and f50 billion in 2023 24 at 1984 85 prices the range depending on the type of indexation hmso 1985a see also hemming and kay 1982 this growth will however be reduced by recent legislation designed to reduce replacement ratios in the state scheme and to encourage private rather than public pension provision creedy and disney 1988a other countries also face substantial rises in real pension expenditure between 1980 and 2025 in

organized labor and the political economy of product market distortions why are economic reforms reversed through strikes and demonstrations in some countries but backed by the labor movement in other countries why do product and labor market distortions differ so much across countries this article addresses these questions by means of a simple heuristic model of the economy that replicates in an integrated manner several independent results from the recent political economy literature unlike most of this literature however the model focuses on the role played by organized labor rather than by rent seeking firms and guilds a two stage game between the government and organized labor determines the level of product market distortions for example import tariffs in the first stage the players may undertake costly actions such as redistributing income or striking in order to increase their bargaining power in the second stage they negotiate over product market distortions and wages under very general assumptions several policy regimes exist changes in the key parameters of the economy may trigger a switch in the strategy of trade unions from confrontation to cooperation and hence change the policy regime cross country data highlight that in spite of its simplicity the model reproduces some observed empirical regularities

is there a negative effect of minimum wages on youth employment in france abstract it is often claimed that the national minimum wage has been a major cause of unemployment in france however econometric studies using time series data have been unable to identify any substantial impact in this paper we analyse what happened to the employment of young persons using sectoral data following the 10 increase in the minimum wage that took place in june 1981 we find that there was a statistically significant negative effect on youth employment

imported input price and the current account in an optimizing model without capital mobility abstract this paper analyses the effect of an oil price increase in an economy which cannot borrow in the international capital markets current account surpluses and deficits are matched by reserve changes at the central bank it is shown in an optimizing setup that an unanticipated oil price increase worsens the current account and lowers the real interest rate contrary to models which assume perfect capital markets

structural distortions and decentralized fiscal policies in emu the combination of discretionary monetary policy labor market distortions and nominal wage rigidity yields excessive inflation as monetary policy tries to exploit nominal wage contracts to address labor market distortions an inflation target reduces inflation but creates a conflict between monetary policy and discretionary fiscal policy if fiscal policy is set at a higher frequency than nominal wages are preventing the associated excessive accumulation of public debt calls for debt ceilings if countries differ substantially in terms of structural distortions uniform debt ceilings must be complemented by country specific debt targets in order to prevent decentralized fiscal authorities from employing debt policy strategically

minimum wages and youth unemployment abstract this paper constructs a labor search model to explore the effects of minimum wages on youth unemployment to capture the gradual decline in unemployment for young workers as they age the standard search model is extended so that workers gain experience when employed experienced workers have higher average productivity and lower job finding and separation rates that match wage and worker flow data in this environment minimum wages can have large effects on unemployment because they interact with a worker s ability to gain job experience the increase in minimum wages between 2007 and 2009 can account for a 0 8 percentage point increase in the steady state unemployment rate and a 2 8 percentage point increase in unemployment for 15 24 year old workers in the model parameterized to simulate outcomes of high school educated workers minimum wages can also help explain the high rates of youth unemployment in france compared to the united states

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

selected works of michael wallerstein centralized bargaining and wage restraint the literature on corporatism has presented much evidence associating highly centralized systems of collective bargaining with wage restraint and relatively successful macroeconomic performance in addition centralized bargaining is associated with relatively small wage differentials this paper presents a model of the impact of centralized wage setting on both real wages and relative wages the central assumption is that the centralization of wage setting at the national level unites unions who are complements in production since a wage increase for one group of workers negatively affects the welfare of other workers who are complements in production centralized wage setters choose wages below the equilibrium of decentralized wage setting it is also shown that if the union confederation maximizes a utilitarian welfare function with equal weights centralized wage setting decreases wage dispersion while low paid workers clearly gain from centralized bargaining high paid workers may prefer that bargaining be decentralized

loss of monetary discretion in a simple dynamic policy game abstract we analyze a simple policy game featuring monetary credibility problems and argue that loss of monetary discretion is not advantageous two elements form the basis of our analysis firstly we endogenize the source of credibility problems and secondly we consider a dynamic framework where credibility problems are not time invariant by doing this we are able to demonstrate that credibility problems are temporary and in steady state the government has removed these through sound policies a binding policy rule will only serve as an obstacle towards this steady state

fiscal policy labor market structure and macroeconomic performance recent work on monetary policy design has investigated the interactions between labor market institutions and monetary policies and their implications for macroeconomic performance this paper argues that this link is not independent of the fiscal policymaking structure

union effects in low wage services evidence from canadian childcare empirical evidence presented in this paper based on survey data for canadian childcare workers in 1991 contradicts most stereotypes of the childcare labor market although childcare labor was low wage the authors find that the union impact on wages 15 and fringe benefits was in line with union effects found in other better compensated work and they find substantial returns to education occupational level and firm specific experience the returns to the skill related attributes were blunted somewhat in the union sector except where such returns stood to benefit the median union voter the findings suggest that monetary incentives can be used to encourage improvements in the education experience and skill acquisition of childcare workers unions can improve wages and benefits for childcare workers just as they can for most other workers suggesting the viability of union organizing in this sector despite the traditional barriers to organizing low wage service sector workers in small firms u nion organizing in the growing lowwage female dominated service sector is often regarded as key to offsetting the decline in union membership that is occurring in the areas of traditional union strength the recent success of the service

fiscal policy when monetary policy is tied to the mast the paper analyses the time inconsistency problem of both exchange rate and fiscal policy in a small open economy the equilibrium under discretion is characterised by inflation and a deficit comm

bargaining over emu vs ems why might the ecb be the twin sister of the bundesbank various authors argue that the european central bank ecb closely resembles the bundesbank because of similarities in the legal status and in the behaviour of the two institutions that twin sister hypothesis tsh contrasts with theoretical analyses that often assume a symmetric ecb we propose a model where countries bargain over the type of the ecb defined as the set of relative weights attached to individual preferences in the joint objective function of the bank we find the conditions under which the tsh is a nash bargaining equilibrium the model emphasises the potential impact of the relative weight held by each country in the european monetary system ems

government special interest groups and economic growth in descending order of robustness and strength the four major conclusions are i the experience of industrial countries in the postwar period indicates that a large welfare state has been associated with a high rate of economic growth ii the olson thesis that powerful special interest groups impede growth receives empirical support iii the relation between growth and the welfare state is non linear with increases in the size of the welfare state beyond some critical level one sixth of gdp according to our estimates resulting in reductions rather than increases in the growth rates and iv the strength of the growth promoting properties of the welfare state is positively related to the strength of special interest groups as proxied by the proportion of the work force unionized one possible interpretation of these results runs as follows a large welfare state may retard economic growth by reducing the incentives to work to save to move and to change on the other hand in a situation where special interest groups have aquired significant power to block change if they so desire the welfare state which offers assistance to those who are the victims of change may play a growth enhancing role in reducing the incentive to block change the fourth conclusion just stated supports this view the welfare state may also foster economic growth through favourable effects on social consensus political stability and labour management relations the results suggest that the growth promoting forces predominate as long as the welfare state is not too large but beyond a certain point which corresponds more or less to the median situation among developed countries today the growth retarding elements come to the fore

the return of lockouts down under in comparative perspective globalization the state and employer militancy virtually unheard of since the great depression lockouts have reemerged strongly in australia and new zealand just as they have all but disappeared in germany the decline of lockouts in germany is convincingly attributed to the enhanced vulnerability of firms to stoppages in certain circumstances amid globalization but the small open economies of australia and new zealand are equally subject to these pressures using macro and micro level data this article illustrates that neoliberal legislative reforms and institutional change have reconfigured the risks costs and payoffs associated with lockouts amid globalization in doing so some flaws in the varieties of capitalism dual convergence literature are highlighted in particular the post hoc classification of the antipodes as liberal market economies bypasses the role of legislative reform in reconstituting employer interests and the differences in electoral party and state structures that impeded facilitated the rise of neoliberal reformers in

monetary policy and the informational implications of the phillips curve in this paper i examine optimal monetary policy and the informational implications of the phillips curve in a stochastic macroeconomic model it is assumed that wages are not only indexed to the price level but respond to the state of the labor market as well if information about current disturbances is conveyed only through market prices it turns out that wages have independent informational content over and above the informational content of other aggregate prices the optimal policy in this model implies reactions to changes in both wages and the aggregate price level as unlike the commonly used model of gray and fischer wages and prices are only partially correlated signals about the unobserved disturbances the paper also discusses an extension to an open economy and the relation between exchange rate policy and wages copyright 1990 by the london school of economics and political science

unions and interindustry wage differentials abstract we investigate the importance of trade unions in collective bargaining in the context of a developing country manufacturing labor market the methodology we adopt to estimate wage differentials follows the method proposed by haisken denew j p and schmidt c m 1997 review of economics and statistics 79 516 521 since it improves on the standard procedure popularized by krueger a b and summers l h 1988 econometrica 56 193 259 our findings indicate that wage dispersion is far greater in the unionized sector of brazilian manufacturing in contrast to evidence from other countries

fiscal activism under inflation targeting and non atomistic wage setting this paper presents a game between a fiscal authority an independent central bank and non atomistic wage setters the effects of fiscal activism and inflation targeting on labour market outcomes are analysed the results suggest that inflation targeting provides incentive for wage restraint moreover real wages are increasing in the degree of fiscal activism as wage setters exploit the response of a fiscal authority seeking to promote employment numerical results suggest that the benefits of targeting inflation are larger when the government pursues an activist policy and therefore that there is some substitutability between fiscal and monetary rules

partially independent central banks politically responsive governments and inflation theories of central bank independence have more exact implications regarding inflation in different political economic environments than generally understood or empirically examined they imply that inflation in any given country time will be a weighted average of what it would be if the central bank completely controlled monetary policy and what it would be if the government completely controlled it with the degree of central bank independence weighting the former an equation embodying this theoretical expectation is estimated by constrained least squares from a time series cross section of inflation rates in developed democracies since the bretton woods era the results confirm that the antiinflationary benefit of central bank independence is not constant but rather depends on every variable in the broader politicaleconomic environment to which wholly autonomous central banks and governments would respond differently conversely the inflationary impacts of all such political economic variables depend on the degree of central bank independence

fiscal policy profits and investment this paper evaluates the effects of fiscal policy on investment using a panel of oecd countries we find a sizeable negative effect of public spending and in particular of its wage component on profits and on business investment this result is consistent with different theoretical models in which government employment creates wage pressure for the private sector various types of taxes also have negative effects on profits but interestingly the effects of government spending on investment are larger than those of taxes our results can explain the so called non keynesian i e expansionary effects of fiscal adjustments jel e22 e62

wage setting and unemployment persistence in europe japan and the usa the persistence of high unemployment in the main european economies is one of the most puzzling economic developments of the past fifteen years average japanese unemployment has risen slightly since the mid seventies whereas unemployment in the united states still exhibits cyclical fluctuations around a gently rising level in marked contrast average unemployment in france germany and the united kingdom rose to a higher plateau during the latter part of the seventies shot up again in the early eighties and has remained persistently high identification of the causes of such unemployment persistence is crucial before one makes policy recommendations three possible causes spring to mind first persistence in the determinants of equilibrium and disequilibrium unemployment second excessive power of insiders in wage setting combined with high correlation between employment status and insider status and finally a high degree of state dependence sluggishness in labour demand although in general one expects all three causes to have played a role in the persistence of high european unemployment there is still a need to identify their relative importance the first set of factors has been assessed empirically in recent papers by among others sachs 1983 bruno and sachs 19x5 bruno 1986 layard and nickel1 1985 bean layard and nickel1 1986 newell and symons 1985 and others many of these papers have also allowed for sluggishness in labour demand although they did not particularly focus on it the second set of factors has been investigated by blanchard and summers 1986 who concluded that there is evidence of much higher correlation between employment status and insider status in the three largest european economies than in the united states

relative wages under decentralized and corporatist bargaining systems in studying the relationship between wage inequality and centralization in collective bargaining we distinguish central from local systems of wage determination by assuming that a central union takes the employment effects of negotiated wages into account whereas unions disregard these effects in decentralized systems two different sources of wage differentials are studied separately i heterogeneous workers with different skills and ii heterogeneous firms with varying levels of economic rent per employee with respect to skill levels the impact of centralization is ambiguous whereas inter firm wage differentials are likely to be lower in corporatist systems

monetary policy and policy credibility theories and evidence within the past decade there has been a significant shift in attitude by many western industrialized countries toward the objectives and conduct of national economic policy the events of the 1970s accelerating inflation and stagnant economic growth motivated the view that inflation had created its own stubborn self sustaining momentum that either was not amendable to the influences of conventional macroeconomic policy or else would yield to such influences only at unacceptable costs this led to the development of a program aimed at reestablishing control over prices while minimizing any adverse consequences of anti inflationary policies on output and employment seen as a new monetary experiment the essential ingredients included prudent financial management abstinence from discretionary intervention commitment to intermediate targets and above all prior announcement of these policies evidence of this program and its effects can be found oni the continents of europe north america and latin america and provide further important lessons in anti inflationary management this paper is a survey of recent theoretical developments in monetary policy which among other issues attempt to explain one rationale for this program and the likely consequences thereof to the extent that the new program of monetary and fiscal reform was deliberately made public and impressed upon citizens as an overriding commitment of governments in advance of its execution reflects a prevailing opinion that economic policies are more effective if they are credible to private economic agents this view emphasized forcefully by william fellner 1976 1979 may be seen as being mainly due to the assimilation of the rational expectations hypothesis

the rise in unemployment a multi country study one of the most remarkable features of recent economic history has been the remorseless rise in unemployment throughout the industrialized countries however while the trend to higher unemployment is universal the experience of individual countries also differs widely the increase is especially marked within the european community where unemployment rates rival those reached in the interwar years by contrast in the scandinavian countries and japan unemployment is lower and has risen very much less experience in the united states lies somewhere between these extremes and in the last few years unemployment there has fallen sharply

transactions technology and the time consistency of optimal policy abstract in a perfect foresight continuous time model of the macro economy turnovsky and brock 1980 have demonstrated that the government s choice of an optimal policy will be time inconsistent only if it is bound by a k rule regarding the growth of nominal monetary balances this result is shown to be invalid when bonds bear a liquidity yield under such circumstances it is shown that all optimal policies are time inconsistent the conclusion is that the liquidity properties of the government s financing instruments play an important role in determining the consistency properties of its optimal policies

how strong is the macroeconomic case for downward real wage rigidity we explore the existence of downward real wage rigidity drwr at the industry level based on data from 19 oecd countries for the period 1973 1999 the results show that drwr compresses the distributions of industry wage changes overall as well as for specific geographical regions and time periods but there are not many real wage cuts that are prevented more important however drwr attenuates larger real wage cuts thus leading to higher real wages there is stronger evidence for downward nominal wage rigidity than for drwr real wage cuts are less prevalent in countries with strict employment protection legislation and high union density

political shocks and public debt the case for a conservative central bank revisited abstract we explore the dynamics of public debt and optimal institutions in the presence of political shocks arising from electoral uncertainty under commitment optimal stabilization is established by combining an inflation target with a debt target the inflation target should be contingent on the political shocks while the debt target forces the government to fully absorb the political shocks in the period in which it occurs in the absence of such inflation and debt targets but with monetary commitment a conservative central bank enhances stabilization an even more conservative central bank is optimal if monetary policy cannot commit

monetary and fiscal policies interaction in monetary unions in this paper the literature on the interaction between monetary and fiscal policies in a monetary union is surveyed by adopting the concept of symbiosis as a starting point the paper highlights the importance of uncertainty policy makers preferences and targets then the role of commitment to policy rules and coordination is addressed the analysis also focuses on the importance of the data considered for the generation of the policy mix as a final step the paper discusses the main results in the literature on public debt management in a monetary union all the reported theoretical results are then adopted to retrieve policy and institutional implications for the european monetary union

collective wage bargaining and the role of institutional stability a cross national comparison of macroeconomic performance since the advent of the economic crisis interest in the efficacy of collective wage bargaining institutions has increased as the labour market was required to bear the burden of economic adjustment and became an important policy field for institutional reform in many countries in this article the role of institutional stability trust and certainty for the efficacy of collective bargaining systems is investigated and their effects on macroeconomic outcomes inflation and unemployment are analysed we argue that stability of the institutional framework of collective bargaining is of major importance for its efficacy as it reduces uncertainty and provides the necessary basis for trust among bargaining actors thus we hypothesise that institutional change and instability are associated with significant transaction costs and have at least temporarily negative effects on economic outcomes the hypotheses are confirmed by an empirical analysis which uses data of 34 industrialised countries from 1965 to 2014

union effects on teacher productivity this paper examines the effect of collective bargaining on several factors known to be determinants of student achievement in the public schools particularly its effect on the teacher s allocation of time among various activities estimates based on a national survey show that bargaining appears to reduce time spent in instruction to increase the level of education of teachers and to increase the number of administrators all differences associated with lower student achievement on the other hand bargaining tends to increase the time teachers spend in class preparation the experience level of teachers and the teacher student ratio differences associated with higher student achievement the net effect of collective bargaining on teacher productivity is therefore not clear at this time

monetary union without fiscal coordination may discipline policymakers abstract with benevolent policymakers and fiscal leadership monetary unification reduces inflation taxes and public spending these disciplining effects of a monetary union which become stronger if the number of participants in the union increases are likely to raise welfare two types of arrangements are considered for the union s common central bank ccb making the ccb more conservative and imposing an inflation target on the ccb in contrast to the results of svensson 1997 svensson l e o 1997 optimal inflation targets conservative central banks and linear inflation contracts american economic review 87 98 114 an optimally designed conservative ccb may outperform inflation targeting finally we find that fiscal coordination offsets the disciplining effects of monetary unification hence subsidiarity in fiscal policymaking may enhance welfare

note on loss of monetary discretion in a simple dynamic policy game jensen 1994a finds that loss of monetary discretion leads to lower welfare however by extending his model we show that if real base money holdings are relatively low as is likely to be the case for modern economics a zero inflation rule may well be preferable to monetary discretion if the emphasis on achieving the output and public spending targets falls a zero inflation rule is more likely to be preferred the increased support for binding policy rules thus conforms with a less tolerant attitude towards inflation

is unionization compatible with professionalism this study examines over 100 collective bargaining agreements covering a wide range of professions and organizations to assess the continuing fundamental debate over the compatibility of unionization with professionalism the author finds that some contractual provisions affecting professional standards participation in organizational decision making and other issues of professional concern support traditional professional values and some do not this mixed evidence challenges claims that unionization necessarily involves the rejection of professionalism

the implications of institutional design for macroeconomic performance reassessing the claims of consensus democracy the choice between a proportional representation pr or plurality based electoral system is commonly assumed to involve a trade off the former is assumed to provide fairer representation but at a

competitive devaluation and the great depression a theoretical reassessment abstract historical accounts indict the devaluations of the 1930s for worsening the great depression to assess the consistency of these arguments we develop a two country model of the gold exchange standard its analysis reveals that devaluation under a gold standard need not be beggar thy neighbor contrary to the thrust of the existing literature competitive devaluations like those of the 1930s could have hastened recovery from the great depression