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Government fiscal efforts vs. labour union strikes. Strategic substitutes or complements?

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  • M. Castellani
  • L. Fanelli
  • M. Savioli

Abstract

To unveil the strategic interaction between the government and the labour union in a unionised economy, a policy-game model is estimated by cointegrated Vector Autoregressive system using Italian quarterly data (1960-2009) on government budget surplus (fiscal efforts), hours not worked (strikes), unemployment and real wages. The long-run cointegration relationships are interpreted as the players' reaction functions and the long-run equilibrium as the equilibrium of the game. The identification of the long-run cointegration relationships allows indeed to determine if efforts and strikes are strategic complements or strategic substitutes. Finally, speed of long-run adjustment provides insights about the effectiveness of government and labour union strategies.

Suggested Citation

  • M. Castellani & L. Fanelli & M. Savioli, 2015. "Government fiscal efforts vs. labour union strikes. Strategic substitutes or complements?," Working Papers wp1013, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp1013
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • 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; Diffusion Processes; State Space Models

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