Dynamic effects of regulation and deregulation in goods and labour markets

Commendatore, Pasquale; Kubin, Ingrid

doi:10.1093/oep/gpn019

Cited by 8 publications

(3 citation statements)

References 40 publications

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“…Moreover, trade barriers, modeled in the form of import tariffs, may stabilize such dynamics and thus have—contrary to conventional wisdom—positive welfare effects. A similar result is demonstrated by Commendatore and Kubin (): while increasing labor and product market flexibility may increase employment, a deregulated economy may be subject to welfare‐reducing fluctuations. Schmitt, Tuinstra, and Westerhoff () consider a model in which firms have the opportunity to enter a competitive market and make an uncertain profit or to obtain a constant profit from a safe outside option.…”

Section: Introductionsupporting

confidence: 76%

Stability and welfare effects of profit taxes within an evolutionary market interaction model

Schmitt

Tuinstra

Westerhoff

2017

Rev International Economics

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Section: Introductionsupporting

confidence: 76%

Stability and welfare effects of profit taxes within an evolutionary market interaction model

Schmitt

Tuinstra

Westerhoff

2017

Rev International Economics

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“…For example, Commendatore and Kubin (2009) show that deregulating labor and product markets may lead to instability and endogenous fluctuations, although it would increase steady state employment. Moreover, recent contributions in the field of New Economic Geography also analyze the effect of trade costs on stability and volatility.…”

Section: Optimal Trade Barriersmentioning

confidence: 99%

Market Interactions, Endogenous Dynamics and Stabilization Policies

Schmitt

Tuinstra

Westerhoff

2017

The Economy as a Complex Spatial System

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Abstract. We review a recent literature that shows that interactions between markets, created by the market entry and exit behavior of boundedly rational firms, may cause complex endogenous dynamics. In particular, these models predict that welfare decreases if firms rapidly switch between markets. Against this background, we show that policy makers have the opportunity to stabilize markets and thus to enhance welfare by regulating interacting markets. For instance, imposing profit taxes reduces the markets' profit differentials and thus slows down the firms' market entry and exit behavior. However, these stabilization policies may also lead to undesirable side effects, such as coexistence of attractors, hysteresis effects and, in a multi-region setting, failure of policy makers to coordinate on the globally optimal policy. Moreover, regulation may be subject to the lobbying efforts of special interest groups and thus not be optimal.

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“…On this debate, seeBlanchard and Giavazzi (2003) and the paper byCommendatore and Kubin (2009) and references therein.…”

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confidence: 99%

Structural reforms and the potential effects on the Italian economy

Annicchiarico

Dio²,

Felici

2013

Journal of Policy Modeling

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Since the second half of 2011, after a period of prolonged low growth, Italy has found itself at the center of a severe economic crisis. Concerns about the sustainability of its debt burden, along with gloomy growth prospects, have pushed up the cost of government borrowing, exacerbating current economic conditions. At the moment Italy is facing two mounting economic challenges: (i) achieve a rapid fiscal consolidation to restore financial market confidence; (ii) implement structural reforms to strengthen medium-term growth prospects. Using the European Commission's model QUEST III with R&D, adapted to Italy, we quantify the potential effects of a set of interventions inspired to the reform packages currently being undertaken or under discussion and consider different levels of policy effort. Results show that reforms are likely to bring about sizable gains in output, consumption, employment and net foreign assets position and that most of these gains derive from labor market reforms. However, the fiscal austerity plan is likely to severely mitigate the positive effects of the interventions, especially during the earlier phases of the reform process. Most of these losses accrue to liquidity-constraint households who would experience a drop in consumption

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Dynamic effects of regulation and deregulation in goods and labour markets

Cited by 8 publications

References 40 publications

Stability and welfare effects of profit taxes within an evolutionary market interaction model

Stability and welfare effects of profit taxes within an evolutionary market interaction model

Market Interactions, Endogenous Dynamics and Stabilization Policies

Structural reforms and the potential effects on the Italian economy

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