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Dissecting the Two-Handed Approach: Who’s the Expert Hand For What?

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  • Jürgen Jerger
  • Oliver Landmann

Abstract

In this paper, we address the question of the macroeconomic assignment problem of wage and demand policy that is implicit in the “two-handed approach”. As a novelty relative to the existing literature, we thereby distinguish the two levels of policy instruments and policy makers. Unfortunately, but also illuminatingly for the policy debate, these two perspectives may well lead to opposing policy recommendations. Whereas demand policy is likely to be the instrument better suited to target output – and hence wage policy to target inflation – it is equally plausible that demand and wage policy makers should not be entrusted with these targets.

Suggested Citation

  • Jürgen Jerger & Oliver Landmann, 2006. "Dissecting the Two-Handed Approach: Who’s the Expert Hand For What?," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 52(3), pages 50-70.
  • Handle: RePEc:aeq:aeqaeq:v52_y2006_i3_q3_p50-70
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    References listed on IDEAS

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    Cited by:

    1. Pusch, Toralf & Heise, Arne, 2008. "Central Banks, Trade Unions and Reputation – Is there Room for an Expansionist Manoeuvre in the European Union?," MPRA Paper 19719, University Library of Munich, Germany.
    2. Arne Heise & Özlem Görmez Heise, 2010. "Europäische Wirtschaftsregierung - Notwendige Ergänzung der EWU oder unrealistische Illusion?," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 36(3), pages 325-347.
    3. Pusch, Toralf, 2007. "Verteilungskampf und geldpolitische Sanktion," Working Papers on Economic Governance 23, University of Hamburg, Department of Socioeconomics.

    More about this item

    Keywords

    Wage Policy; Demand Policy; Assignment Problem; Two-Handed Approach;

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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