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Dynamic effects of regulation and deregulation in goods and labour markets

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  • Pasquale Commendatore
  • Ingrid Kubin

Abstract

It has been argued in recent economic literature that deregulation in both product and labour markets has beneficial impacts on employment and on real wages. The results offered to support this argument, however, are controversial. So far the debate has been concerned with comparative static results. This paper reassesses the consequences of deregulation in a dynamic context. In our model—a dynamic counterpart of Blanchard and Giavazzi's prototype model—liberalisation in product and/or labour markets also increases the equilibrium employment and wage rates. However, with boundedly rational firms and trade unions, deregulation may generate endogenous fluctuations. Copyright 2009 , Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 61 (2009)
Issue (Month): 3 (July)
Pages: 517-537

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Handle: RePEc:oup:oxecpp:v:61:y:2009:i:3:p:517-537

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  1. Lars Calmfors & Åsa Johansson, 2001. "Unemployment Benefits, Contract Length and Nominal Wage Flexibility," CESifo Working Paper Series, CESifo Group Munich 514, CESifo Group Munich.
  2. Dixit, Avinash K & Stiglitz, Joseph E, 1993. "Monopolistic Competition and Optimum Product Diversity: Reply," American Economic Review, American Economic Association, American Economic Association, vol. 83(1), pages 302-04, March.
  3. d'ASPREMONT, C. & DOS SANTOS FERREIRA, R. & GÉRARD-VARET, L.-A., . "On the Dixit-Stiglitz model of monopolistic competition," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1211, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. d ASPREMONT, Claude, & DOS SANTOS FERREIRA , Rodolphe & GERARD-VARET , Louis-André, 1994. "Market Power, Coordination Failures and Endogenous Fluctuations," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1994068, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Christopher Pissarides, 1997. "The impact of employment tax cuts on unemployment and wages : the role of unemployment benefits and tax structure," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 2332, London School of Economics and Political Science, LSE Library.
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  7. d’ASPREMONT, C. & DOS SANTOS FERREIRA, R. & GERARD-VARET, L.-A., 1986. "On monopolistic competition and involuntary unemployment," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1986035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  10. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects Of Regulation And Deregulation In Goods And Labor Markets," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(3), pages 879-907, August.
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  14. Calmfors, Lars & Johansson, Åsa, 2001. "Unemployment Benefits, Contract Length And Nominal Wage Flexibility," Seminar Papers, Stockholm University, Institute for International Economic Studies 692, Stockholm University, Institute for International Economic Studies.
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Cited by:
  1. Annicchiarico, Barbara & Di Dio, Fabio & Felici, Francesco, 2013. "Structural reforms and the potential effects on the Italian economy," Journal of Policy Modeling, Elsevier, Elsevier, vol. 35(1), pages 88-109.
  2. FRANCESCO FELICI & Barbara Annicchiarico & Fabio Di Dio, 2012. "Structural Reforms and the Potential Effects on the Italian Economy," EcoMod2012, EcoMod 5073, EcoMod.
  3. Fabio Di Dio & Barbara Annicchiarico & Francesco Felici, 2011. "The macroeconomics of Europe 2020 reform strategy and the potential effects on Italian economy," EcoMod2011, EcoMod 2866, EcoMod.
  4. Tuinstra, Jan & Wegener, Michael & Westerhoff, Frank, 2013. "Positive welfare effects of trade barriers in a dynamic equilibrium model," BERG Working Paper Series, Bamberg University, Bamberg Economic Research Group 91, Bamberg University, Bamberg Economic Research Group.

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