We consider a three sector small open economy, with a monopolistic non-traded sector, a competitive traded good sector, and a capital goods sector. In both the consumer good sectors, there are enterprise unions that bargain sequentially over wages and employment as in Manning (1987). This approach encompasses the standard monopoly union, right to manage and efficient bargain models. We consider first the effects of bargaining strengths at each stage on overall macroeconomic equilibrium. Here we find strong general equilibrium spillover effects: bargaining strengths in one sector affecting the other sectors. Second, we consider the influence of the bargaining process on the welfare analysis of fiscal policy.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
937.
Find related papers by JEL classification: E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
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