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A macro model with trade unions

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  • Shah, Anup

Abstract

The model features the usual IS and LM curves and a dynamic equation for changes in the government's budget deficit. The price level is assumed to be prefectly flexible so that the goods market always clears, whereas trade unions play an important role in wage determination. Two union models are considered, the monopoly union and the efficient bargain model. With such explicit recognition of union behavior, the way conventional policies operate is changed with differing outcome. Since there is full price flexibility and the goverment deficit disappears, the effectiveness of reflationary policies is not subject to the usual criticisms.

Suggested Citation

  • Shah, Anup, 1985. "A macro model with trade unions," Journal of Macroeconomics, Elsevier, vol. 7(2), pages 175-194.
    • Handle: RePEc:eee:jmacro:v:7:y:1985:i:2:p:175-194
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    Cited by:

    1. Kim Hawtrey, 1990. "Dynamic Behaviour of a Unionized Solow‐Swan Economy," The Economic Record, The Economic Society of Australia, vol. 66(2), pages 81-92, June.
    2. Chang, Juin-Jen & Lai, Ching-Chong & Chang, Wen-Ya, 1999. "The Mundell proposition with efficient wage-employment bargaining," Journal of Macroeconomics, Elsevier, vol. 21(4), pages 765-784.
    3. Ching-Chong Lai & Juin-Jen Chang, 2002. "Nominal versus real wage rigidity in a monopoly union: A synthesis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(1), pages 61-73, March.

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