The Impact of Central Bank Independence and Union Concentration on Macroeconomic Perfromance in the Presence of Aggregate Supply Shocks. Evidence from 10 OECD Countries (1971-85)
In this paper, we use panel data from 1971 to 1985 to test the hypothesis that differences in monetary and wage institutions can explain a significant fraction of the variations in the macroeconomic performance of 10 OECD countries following the OPEC shocks of 1973-74 and 1979-80. After controlling for central bank independence, we detect a hump-shaped relationship between union density and inflation, and a negative relationship between union concentration and inflation. These findings are robust to the use of different estimators and across various assumptions on the structure of error terms. The impact of central bank independence and union variables on unemployment is more ambiguous, and is sensitive to the inclusion of interactions between these variables. Interesting results are obtained when we split out sample, first by the degree of central bank independence, and then by union concentration.
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Length: 39 pages Date of creation: 2001 Date of revision: Handle: RePEc:mlb:wpaper:805
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Find related papers by JEL classification: E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Marta Campillo & Jeffrey A. Miron, 1997.
"Why Does Inflation Differ across Countries?,"
NBER Chapters,
in: Reducing Inflation: Motivation and Strategy, pages 335-362
National Bureau of Economic Research, Inc.
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