Labor market structures and the sacrifice ratio

Bowdler, Christopher; Nunziata, Luca

doi:10.1016/j.jmacro.2010.01.003

Cited by 9 publications

(4 citation statements)

References 33 publications

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“…Badinger (2009) has obtained results consistent with this prediction in an analysis of data from 91 countries over the [1985][1986][1987][1988][1989][1990][1991][1992][1993][1994][1995][1996][1997][1998][1999][2000][2001][2002][2003][2004] interval. Recent work has added other elements that can impinge on the relationship between trade openness and the sacrifice ratio: political regime (Caporale and Caporale, 2008), progressivity of income taxation (Daniels and VanHoose, 2009a), capital mobility (Daniels and VanHoose, 2009b), labor-market structures (Bowdler and Nunziata, 2010), reliance on imported commodities in production (Pickering and Valle, 2012).…”

Section: Introductionmentioning

confidence: 99%

“…This is motivated by both the theoretical model of Section 2 and the recent work of Nickell et al (2005) and Bowdler and Nunziata (2010). In a study of unemployment in OECD countries, Nickell et al find that changes in several labor market institutions (benefits, trade union density, wage coordination, employment protection laws, and labor taxes) explain approximately 55 percent of the rise in unemployment that occurred in Europe over a thirty-five year period.…”

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confidence: 99%

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Exchange-rate pass through, openness, and the sacrifice ratio

Daniels

VanHoose

2013

Journal of International Money and Finance

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Considerable recent work has reached mixed conclusions about whether and how globalization affects the inflation-output trade-off and suggests that the ultimate effect of openness on the output-inflation relationship is influenced by a variety of factors. In this paper, we consider the impact of exchange-rate pass through and examine how pass through conditions the effect of openness on the sacrifice ratio. We develop a simple theoretical model showing how the extent of both pass through and openness can interact to influence the output-inflation relationship. Next we empirically explore the nature of these two variables and their interaction. Results indicate that greater pass through increases the sacrifice ratio, that there is statistically significant interaction between pass through and openness, andonce the extent of pass through is taken into account alongside other factors that affect the sacrifice ratio, such as central bank independence-openness fails to exert an empirically robust effect on the sacrifice ratio.

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Section: Introductionmentioning

confidence: 99%

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Exchange-rate pass through, openness, and the sacrifice ratio

Daniels

VanHoose

2013

Journal of International Money and Finance

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“…A number of papers attempt to identify the importance of some specific factors for the size of sacrifice ratio. For instance, Jordan (1997Jordan ( , 1999, Baltensperger and Kugler (2000), Brumm and Krashevski (2003), Diana and Sidiropoulos (2004), and Daniels et al (2005) study the relationship between CBI and the sacrifice ratio; Temple (2002), Daniels, et al (2005), , 2013), and Bowdler (2009 investigate the interaction between openness and the sacrifice ratio; Chortareas, et al (2003) explore how central bank transparency affects sacrifice ratio: while and Bowdler and Nunziata (2010) focus on the effects of labor market institutions on sacrifice ratios.…”

Section: Literature Reviewmentioning

confidence: 99%

Inflation targeting and disinflation costs in Emerging Market economies

Stojanovikj,

Petrevski

2023

Empirica

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In this paper, we study whether adopting Inflation Targeting (IT) in Emerging Market Economies (EMEs) affects the output costs of disinflation, controlling for a number of additional factors. Based on a sample of 170 disinflation episodes in 44 EMEs over the 1970-2017 period, we provide strong evidence that adopting IT is associated with a higher sacrifice ratio in EMEs. In addition, we find that gradual disinflation may be less costly in EMEs. Moreover, we show that trade openness is associated with a lower sacrifice ratio, while both central bank independence (CBI) and external shocks have adverse effects on the sacrifice ratio. Our main findings are robust to alternative classifications of the IT regime, alternative definitions of disinflation episodes, different thresholds for high inflation, different peak levels of trend inflation rate, across various specifications of the empirical model, as well as for both the entire sample and the sub-sample covering the post-1990s period.

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“…Studies show that the outp countries that have more flexible labour but different relationship between the percentage point-years of unemployme inflation of one percentage point), have (e.g. Bowdler and Nunziata, 2010). B employment protection laws is significan OECD (Figure 9).…”

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Policy Options to Durably Resolve Euro Area Imbalances

Guillemette

Turner

2013

OECD Economics Department Working Papers

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JT03336673Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2013) Policy Options to Durably Resolve Euro Area ImbalancesA simple econometric framework is presented linking current account balances of euro area countries to intra and extra euro area competitiveness, cyclical positions, fiscal positions and the oil price. The framework is then used to cyclically-adjust observed current account balances and illustrate the scale of the additional adjustments to competitiveness and/or fiscal balances required in the euro area periphery to bring structural current account balances to levels compatible with sustainable net external debt levels. In Spain and Portugal, cost competitiveness relative to the rest of the euro area would need to improve by about 30%, and by more than twice that in Greece. In peripheral countries, a combination of structural reforms to boost productivity and enhance the flexibility of labour markets, ambitious fiscal consolidation and reductions in labour taxes could substantially facilitate the rebalancing process and reduce the extent to which the burden of adjustment is reliant on further prolonged demand weakness. Surplus and/or strong competitiveness countries could help by likewise making labour and product markets more flexible, accepting above-normal inflation for an extended period and boosting demand, perhaps through reduced fiscal austerity. JEL classification codes: F32; F34; E61; J31.Key words: euro area; imbalances; periphery; competitiveness; unit labour costs; current account; external debt; Greece; Ireland; Portugal; Spain; Italy; Germany. ******************** Options de politiques publiques pour réduire durablement les déséquilibres de la zone euroUn cadre économétrique simple est développé qui lie la balance au compte courant des pays de la zone euro à la compétitivité intra et extra euro, aux positions cycliques, aux positions budgétaires et au prix du pétrole. Ce cadre est ensuite utilisé pour corriger les balances courantes observées pour le cycle économique et pour illustrer la taille des ajustements additionnels à la compétitivité et/ou aux budgets nécessaires dans la périphérie de la zone euro pour amener les comptes courants structurels à des balances compatibles avec des niveaux durables de dette extérieure nette. L'Espagne et le Portugal nécessiteraient une amélioration de leur compétitivité par rapport au reste de la zone euro de l'ordre de 30%, et la Grèce de plus de deux fois cela. Dans la périphérie de la zone euro, une combinaison de réformes structurelles pour stimuler la productivité et améliorer la flexibilité du marché du travail, de consolidation budgétaire ambitieuse et d'allègement de la taxation du travail pourrait faciliter substantiellement le processus de rebalancement et réduire la mesure dans laquelle le poid...

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Labor market structures and the sacrifice ratio

Cited by 9 publications

References 33 publications

Exchange-rate pass through, openness, and the sacrifice ratio

Exchange-rate pass through, openness, and the sacrifice ratio

Inflation targeting and disinflation costs in Emerging Market economies

Policy Options to Durably Resolve Euro Area Imbalances

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