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Macroeconomic Effects Of Regulation And Deregulation In Goods And Labor Markets

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  • Olivier Blanchard
  • Francesco Giavazzi

Abstract

Product and labor market deregulation reduce and redistribute rents, leading economic players to adjust to this new distribution. It typically comes with distribution and dynamic effects. To study these effects, we build a macroeconomic model on two central assumptions: monopolistic competition in the goods market, which determines the size of rents; and bargaining in the labor market, which determines the distribution of rents. Product market regulation determines entry costs and the degree of competition. Labor market regulation determines the bargaining power of workers. We show the effects of deregulation. We then use our results to discuss the political economy of deregulation, and recent macroeconomic evolutions in Europe. © 2001 the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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Bibliographic Info

Article provided by MIT Press in its journal The Quarterly Journal of Economics.

Volume (Year): 118 (2003)
Issue (Month): 3 (August)
Pages: 879-907

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Handle: RePEc:tpr:qjecon:v:118:y:2003:i:3:p:879-907

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  1. Las raíces políticas de la crisis del Euro
    by Cives in Politikon on 2012-05-22 11:48:47
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