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Intertemporale Output- und Beschäftigungseffekte angebotsorientierter Politikmaßnahmen in einer Währungsunion / Short- and Long-run Effects of Supply Side Policies within a Currency Union

Author

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  • Wohltmann Hans-Wemer
  • Bulthaupt Frank

    (Institut für Theoretische Volkswirtschaftslehre der Christian-Albrechts-Universität zu Kiel, Wilhelm-Seelig-Platz 1, D-24118 Kiel)

Abstract

The paper analyses the short-, intermediate- and long-run effects of anticipated supply side policies within a two-country model of a currency union that is characterized by perfect foresight dynamics, saddle-point stability and the incorporation of intermediate goods imports. We show that both a reduction of labor extra-costs and a revenue neutral cut in the employers’ contribution to the social security has indeterminate short-run effects resulting from an ambiguous exchange-rate jump in the announcement interval. However, the policies achieve in the long-run an unambiguous rise in aggregate output and employment. The employment increase is stronger than the output expansion due to a decline in the producers’ real wage rate and a rise in the real factor price of the intermediate goods imports. Our results display positive long-run output and employment effects as well, if the employers’ and the employees’ contributions to the social security are reduced simultaneously and the revenue loss is compensated by an under-proportional rise of the VAT-rate. Unilateral supply side policies have ambiguous spillover effects in the second member country of the union.

Suggested Citation

  • Wohltmann Hans-Wemer & Bulthaupt Frank, 1999. "Intertemporale Output- und Beschäftigungseffekte angebotsorientierter Politikmaßnahmen in einer Währungsunion / Short- and Long-run Effects of Supply Side Policies within a Currency Union," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 218(1-2), pages 1-22, February.
  • Handle: RePEc:jns:jbstat:v:218:y:1999:i:1-2:p:1-22
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    Citations

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    Cited by:

    1. Clausen, Volker & Wohltmann, Hans-Werner, 2011. "Oil Price Shocks and Cyclical Dynamics in an Asymmetric Monetary Union," Ruhr Economic Papers 247, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. repec:zbw:rwirep:0247 is not listed on IDEAS
    3. Clausen, Volker & Wohltmann, Hans-Werner, 2005. "Monetary and fiscal policy dynamics in an asymmetric monetary union," Journal of International Money and Finance, Elsevier, vol. 24(1), pages 139-167, February.
    4. Clausen Volker & Wohltmann Hans-Werner, 2013. "Oil Price Dynamics and Monetary Policy in a Heterogeneous Monetary Union," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 233(2), pages 159-187, April.
    5. Volker Clausen & Hans-Werner Wohltmann, 2011. "Oil Price Shocks and Cyclical Dynamics in an Asymmetric Monetary Union," Ruhr Economic Papers 0247, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. Wohltmann, Hans-Werner & Clausen, Volker, 2003. "Oil Price Shocks and Monetary Policy in an Asymmetric Monetary Union," Economics Working Papers 2003-11, Christian-Albrechts-University of Kiel, Department of Economics.

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