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Shocks and frictions under right-to-manage wage bargaining: a transatlantic perspective

Author

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  • Consolo, Agostino
  • Hertweck, Matthias S.

Abstract

This paper introduces staggered right-to-manage wage bargaining into a New Keynesian business cycle model. Our key result is that the model is able to generate persistent responses in output, inflation, and total labor input to both neutral technology and monetary policy shocks. Furthermore, we compare the model's dynamic behavior when calibrated to the US and to an European economy. We find that the degree of price rigidity explains most of the differences in response to a monetary policy shock. When the economy is hit by a neutral technology shock, both price and wage rigidities turn out to be important.

Suggested Citation

  • Consolo, Agostino & Hertweck, Matthias S., 2010. "Shocks and frictions under right-to-manage wage bargaining: a transatlantic perspective," Working papers 2010/01, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2010/01
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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