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Is Corporatism Feasible?

  • Nicola Acocella
  • Giovanni Di Bartolomeo

This paper investigates the effects of cooperation (corporatism) on macroeconomic performance by considering a rather standard policy game between the government and a monopoly union. We stress the shortcomings of the traditional way used to model cooperation in policy games (the maximization of the weighted sum of players' preferences), which only approximates the Nash product solution. We find that it is difficult to implement corporatism, although it generally increases social welfare, as it often reduces the union's utility. In particular, we show that an inflation-neutral union will never find it profitable to cooperate with the government, unless side-payments are considered. The study of this issue, however, is beyond the scope of this paper. Copyright � 2007 The Authors; Journal compilation � 2007 Blackwell Publishing Ltd.

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Article provided by Wiley Blackwell in its journal Metroeconomica.

Volume (Year): 58 (2007)
Issue (Month): 2 (05)
Pages: 340-359

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Handle: RePEc:bla:metroe:v:58:y:2007:i:2:p:340-359
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  1. Acocella, Nicola & Di Bartolomeo, Giovanni & Pauwels, Wilfried, 2007. "Is there any scope for corporatism in stabilization policies?," MPRA Paper 3584, University Library of Munich, Germany.
  2. Andersen, Torben M. & Schneider, Friedrich, 1986. "Coordination of fiscal and monetary policy under different institutional arrangements," European Journal of Political Economy, Elsevier, vol. 2(2), pages 169-191.
  3. Cukierman, Alex & Lippi, Francesco, 1998. "Central Bank Independence, Centralization of Wage Bargaining, Inflation and Unemployment - Theory and Evidence," CEPR Discussion Papers 1847, C.E.P.R. Discussion Papers.
  4. Cukierman, A. & Lippi, F., 1999. "Labor markets and Monetary Union : A Strategic Analysis," Discussion Paper 1999-100, Tilburg University, Center for Economic Research.
  5. Acocella, Nicola & Di Bartolomeo, Giovanni, 2004. "Non-neutrality of monetary policy in policy games," European Journal of Political Economy, Elsevier, vol. 20(3), pages 695-707, September.
  6. Jensen, Henrik, 1997. " Monetary Policy Cooperation May Not Be Counterproductive," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 73-80, March.
  7. 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.
  8. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
  9. Gylfason, Thorvaldur & Lindbeck, Assar, 1994. " The Interaction of Monetary Policy and Wages," Public Choice, Springer, vol. 79(1-2), pages 33-46, April.
  10. 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.
  11. Burda, Michael C., 1997. "Corporatism, labor unions and the safety net," European Economic Review, Elsevier, vol. 41(3-5), pages 635-646, April.
  12. Acocella, Nicola & Ciccarone, Giuseppe, 1997. " Trade Unions, Nonneutrality and Stagflation," Public Choice, Springer, vol. 91(2), pages 161-78, April.
  13. Rogoff, Kenneth, 1985. "Can international monetary policy cooperation be counterproductive?," Journal of International Economics, Elsevier, vol. 18(3-4), pages 199-217, May.
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