Government Fiscal Efforts vs. Labour Union Strikes: An Estimated Cournot-Nash Policy Game
AbstractIn this paper, we propose a novel policy-game model with perfect information to analyze the simultaneous interaction between the government and the labour union in a unionized economy. Our model explains how the strategic interaction between the labour union, mainly concerned with wages and strikes, and the government, mainly concerned with unemployment and fiscal policy, gives rise to a long run Cournot-Nash equilibrium. Our policy-game model is estimated by a cointegrated Vector Autoregressive system using Italian quarterly data on government budget surplus (fiscal efforts) and on hours not worked (strikes) on the period 1960-2009. Since the government budget surplus is the variable which adjusts faster to equilibrium, our estimated speeds of long run adjustment point out that the government is more effective than the labour union. A phase diagram interpretation of the estimated model is provided.
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Bibliographic InfoPaper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 33_13.
Date of creation: Jun 2013
Date of revision: Aug 2013
Fiscal efforts; strikes; policy game; VEqC; speed of adjustment;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-05 (All new papers)
- NEP-GTH-2013-07-05 (Game Theory)
- NEP-LAB-2013-07-05 (Labour Economics)
- NEP-MAC-2013-07-05 (Macroeconomics)
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