Centralised Wage Setting, Inflation Contracts, and the Optimal Choice of Central Banker

Lawler, Phillip

doi:10.1111/1468-0297.00537

Cited by 55 publications

(49 citation statements)

References 21 publications

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“…Sibert (1999) and Sibert and Sutherland (2000) analyse the effects of the monetary policy regime on the governmet's incentives to undertake politically costly reforms. 5 A non exaustive list includes Skott (1997), Jensen (1997), Gruner and Hefeker (1999), Cukierman andLippi (1999, 2001), Guzzo and Velasco (1999), Soskice and Iversen (2000), Lawler (2000), Dalmazzo (2004, 2006). Cukierman (2004) provides a survey of the recent literature.…”

Section: Introductionmentioning

confidence: 99%

Fiscal-monetary policy interactions in the presence of unionized labor markets

Cukierman

Dalmazzo

2006

Int Tax Public Finan

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This paper develops a framework for studying the interactions between labor unions, fiscal policy, monetary policy and monopolistically competitive firms. The framework is used to investigate the effects of labor taxes, the replacement ratio, labor market institutions and monetary policymaking institutions on economic peformance in the presence of strategic interactions between labor unions and the central bank. Given fiscal variables, higher levels of either centralization of wage bargaining, or of central bank conservativeness are associated with lower unemployment and inflation. However the forward shifting of changes in either labor taxes or in unemployment benefits to labors costs is larger the higher are those institutional variables. The paper also considers the effects of those institutions on the choice of labor taxes and of unemployment benefits by governments concerned with the costs of inflation and unemployment, as well as with redistribution to particular constituencies. A main result is that, normally, higher levels of centralization and conservativeness induce government to set higher labor taxes.

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Section: Introductionmentioning

confidence: 99%

Fiscal-monetary policy interactions in the presence of unionized labor markets

Cukierman

Dalmazzo

2006

Int Tax Public Finan

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“…The union's welfare increases with the real wage but falls with output distortions (see Lawler, 2000aLawler, , 2000bCukierman, 2004). 6 The assumption 3 Equation (1) is akin to Alesina and Tabellini (1987) and Beetsma and Bovenberg (1998).…”

Section: The Modelmentioning

confidence: 99%

The macroeconomics of social pacts

Acocella

Bartolomeo

Tirelli

2009

Journal of Economic Behavior & Organization

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In this paper we analyze macroeconomic interactions between trade unions, the central bank and the …scal policymaker. We explicitly model unions'concern for public expenditure, paving the way for an analysis of the potential gains from cooperation between the …scal policymaker and the unions, i.e. the so-called corporatist or social pacts that have characterized economic policies in a number of European countries in the last few decades. We also highlight the profoundly di¤erent incentives generated by institutional arrangements such as the Maastricht criteria and the Stability and Growth Pact. The former has unambiguously induced more e¢ cient outcomes; the latter is likely to back…re! Jel: E42, E58, E61, E62, E64, H30, J51, J58.

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“…Other than on central bank's in ‡ation aversion,¯, the economy's in ‡ationary bias depends on labour market features as synthesised in the elasticities´N and´¤ N . Using (15) it is easy to verify that equilibrium in ‡ation is higher the less substitutable the di¤erent types of labour and the more decentralised the wage bargaining structure. 10 A similar procedure that combines (12) and (9) yields the equilibrium in ‡ation rate in the monetary union…”

Section: In ‡Ation Under Alternative Monetary Regimesmentioning

confidence: 99%

“…2 Strategic interactions between the uni…ed central bank and wage setters as those analysed in this paper may be relevant in determining the in ‡ation-ary performance in the EMU, as several European countries are characterised by intermediate to high centralisation in wage bargaining. 3 The results in 2 The signi…cance of unionised wage setting for the otpimal design of central banking institutions in a closed economy is analysed, among others, by Lawler [2000]. the paper stress the harmful consequences of establishing the anti-in ‡ation credententials of the European Central Bank (ECB) through the standard Barro-Gordon way of reputation building.…”

Section: Introductionmentioning

confidence: 99%

Inflationary performance in a monetary union with large wage setters

Cavallari¹

2004

Monetary Policy, Fiscal Policies and Labour Markets

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In ‡ationary performance in a monetary union with large wage setters ¤ Lilia Cavallari University of Rome "La Sapienza" Terms of use: Documents in EconStor may AbstractBuilding on a micro-founded model of a two region-world economy in the tradition of the new open economy literature, this paper analyses the strategic interaction of large wage-setters and the central bank when switching from a regime of uncoordinated national monetary policies to a monetary union. The establishment of a monetary union is shown to favour wage restraint, provided the uni…ed central bank is not too conservative. Wage discipline may reduce equilibrium in ‡ation in a monetary union relative to the one under uncoordinated national monetary policies when wage setting is centralised across member countries.JEL codes:E5, F4

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Centralised Wage Setting, Inflation Contracts, and the Optimal Choice of Central Banker

Cited by 55 publications

References 21 publications

Fiscal-monetary policy interactions in the presence of unionized labor markets

Fiscal-monetary policy interactions in the presence of unionized labor markets

The macroeconomics of social pacts

Inflationary performance in a monetary union with large wage setters

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