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Wage Setters, Central Bank Conservatism and Economic Performance

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  • Clemente De Lucia

    (ISAE - Institute for Studies and Economic Analyses)

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    Abstract

    This work analyses the relationship among wage setters, Central Bank conservatism and economic performance. The main findings are that we can not confirm the so called Calmfors-Driffill effect. Key parameter is the elasticity of substitution between labor types, or , which affects the unions' market power. It emerges that with high values of  decentralized economies, rather than centralized ones, face lower levels of inflation and unemployment. The opposite occurs with low values of . Dealing with the conservatism of the Central Bank, the paper shows that an ultra conservative central banker, rather than a populist one is able to maximize the welfare of a society.

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    File URL: http://lipari.istat.it/digibib/Working_Papers/de_lucia_34_03.pdf
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    Bibliographic Info

    Paper provided by ISTAT - Italian National Institute of Statistics - (Rome, ITALY) in its series ISAE Working Papers with number 34.

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    Length: 45 pages
    Date of creation: Apr 2003
    Date of revision:
    Handle: RePEc:isa:wpaper:34

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    Related research

    Keywords: Key Words: Non Atomistic Agents; Conservatism; Wage Bargaining;

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    1. Francesco Lippi, 2000. "Revisiting the Case for a Populist Central Banker," Temi di discussione (Economic working papers) 386, Bank of Italy, Economic Research and International Relations Area.
    2. Coricelli, Fabrizio & Cukierman, Alex & Dalmazzo, Alberto, 2000. "Monetary Institutions, Monopolistic Competition, Unionized Labour Markets And Economic Performance," CEPR Discussion Papers 2407, C.E.P.R. Discussion Papers.
    3. Steinar Holden, 2001. "Monetary Regimes and the Co-Ordination of Wage Setting," CESifo Working Paper Series 429, CESifo Group Munich.
    4. Coricelli, Fabrizio & Cukierman, Alex & Dalmazzo, Alberto, 2001. "Economic Performance and Stabilization Policy in a Monetary Union with Imperfect Labour and Goods Markets," CEPR Discussion Papers 2745, C.E.P.R. Discussion Papers.
    5. Alex Cukierman & Francesco Lippi, 2000. "Labor Markets and Monetary Union; a Strategic Analysis," Temi di discussione (Economic working papers) 365, Bank of Italy, Economic Research and International Relations Area.
    6. Maurice Obstfeld & Kenneth Rogoff, 1999. "New Directions for Stochastic Open Economy Models," NBER Working Papers 7313, National Bureau of Economic Research, Inc.
    7. Francesco Lippi, 2000. "Strategic Monetary Policy with Non Atomistic Wage Setters," Econometric Society World Congress 2000 Contributed Papers 1354, Econometric Society.
    8. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-95, September.
    9. Jordi Gali, 2002. "New Perspectives on Monetary Policy, Inflation, and the Business Cycle," NBER Working Papers 8767, National Bureau of Economic Research, Inc.
    10. Cukierman, A. & Lippi, F., 1998. "Central Bank Independence, Centralization of Wage Bargaining, Inflation and Unemployment - Theory and Some Evidence," Discussion Paper 1998-116, Tilburg University, Center for Economic Research.
    11. Cubitt, Robin P, 1995. " Corporatism, Monetary Policy and Macroeconomic Performance: A Simple Game Theoretic Analysis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(2), pages 245-59, June.
    12. Jerger, Jurgen, 2002. "How strong is the case for a populist central banker? A note," European Economic Review, Elsevier, vol. 46(3), pages 623-632, March.
    13. David Soskice & Torben Iversen, 2000. "The Nonneutrality Of Monetary Policy With Large Price Or Wage Setters," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 265-284, February.
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