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A Game-Theoretical Interpretation of Inflation and Unemployment in Western Europe

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  • Scharpf, Fritz W.

Abstract

The paper aims at a more complete, yet still parsimonious, explanation of macro-economic policy failure and success during the ‘stagflation’ period of the 1970s. Focusing on four countries, Austria, Great Britain, Sweden and West Germany, it is shown that both runaway inflation and rising unemployment could be avoided whenever it was possible to achieve a Keynesian concertation between fiscal and monetary expansion on the one hand and union wage restraint on the other. The actual policy experiences of the four countries are then explained in terms of the linkage between a ‘coordination game’ played between the government and the unions in which macro-economic outcomes are determined, and a politics game in which the government tries to anticipate the electoral responses of different voter strata to these outcomes.

Suggested Citation

  • Scharpf, Fritz W., 1987. "A Game-Theoretical Interpretation of Inflation and Unemployment in Western Europe," Journal of Public Policy, Cambridge University Press, vol. 7(3), pages 227-257, July.
    • Handle: RePEc:cup:jnlpup:v:7:y:1987:i:03:p:227-257_00
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    Citations

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    Cited by:

    1. Fritz W. Scharpf, 1991. "Games Real Actors Could Play: The Challenge of Complexity," Journal of Theoretical Politics, , vol. 3(3), pages 277-304, July.
    2. Scharpf, Fritz W., 2000. "Institutions in comparative policy research," MPIfG Working Paper 00/3, Max Planck Institute for the Study of Societies.
    3. Unger, Brigitte & Klatzer, Elisabeth, 1992. "Will Internationalization Lead to a Convergence of National Economic Policies?," Department of Economics Working Paper Series 12, WU Vienna University of Economics and Business.
    4. Zdenek Kudrna, 2015. "Austria: stable society and crisis-exposed banks," Working Papers of the Vienna Institute for European integration research (EIF) 1, Institute for European integration research (EIF).
    5. Kevin Featherstone, 2008. "‘Varieties of Capitalism’ and the Greek case: explaining the constraints on domestic reform?," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 11, Hellenic Observatory, LSE.
    6. Fritz W. Scharpf, 1991. "Response to Steven J. Brams and Bruno S. Frey," Rationality and Society, , vol. 3(2), pages 261-265, April.
    7. Christopher Hood, 1991. "Stabilization and Cutbacks," Journal of Theoretical Politics, , vol. 3(1), pages 37-63, January.
    8. Jaap Woldendorp & Hans Keman, 2010. "Dynamic institutional analysis: measuring corporatist intermediation," Quality & Quantity: International Journal of Methodology, Springer, vol. 44(2), pages 259-275, February.
    9. William Ricardo de Sá, 1998. "Repensando os jogos de política econômica com governos sinceramente estabilizadores," Textos para Discussão Cedeplar-UFMG td122, Cedeplar, Universidade Federal de Minas Gerais.
    10. Robert Franzese, 2001. "Strategic Interactions of Monetary Policymakers and Wage/Price Bargainers: A Review with Implications for the European Common-Currency Area," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(4), pages 457-486, December.
    11. Scharpf, Fritz W., 1990. "Games Real Actors Could Play: The Problem of Connectedness," MPIfG Discussion Paper 90/8, Max Planck Institute for the Study of Societies.
    12. Featherstone, Kevin, 2008. ""Varieties of capitalism" and the Greek case: explaining the constraints on domestic reform?," LSE Research Online Documents on Economics 5608, London School of Economics and Political Science, LSE Library.
    13. Hood, Christopher, 1995. "The "new public management" in the 1980s: Variations on a theme," Accounting, Organizations and Society, Elsevier, vol. 20(2-3), pages 93-109.

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