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Wage Setters, Central Bank Conservatism and Economic Performance

  • Clemente De Lucia

    (ISAE - Institute for Studies and Economic Analyses)

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    This work analyses the relationship among wage setters, Central Bank conservatism and economic performance. The main findings are that we can not confirm the so called Calmfors-Driffill effect. Key parameter is the elasticity of substitution between labor types, or , which affects the unions' market power. It emerges that with high values of  decentralized economies, rather than centralized ones, face lower levels of inflation and unemployment. The opposite occurs with low values of . Dealing with the conservatism of the Central Bank, the paper shows that an ultra conservative central banker, rather than a populist one is able to maximize the welfare of a society.

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    Paper provided by ISTAT - Italian National Institute of Statistics - (Rome, ITALY) in its series ISAE Working Papers with number 34.

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    Length: 45 pages
    Date of creation: Apr 2003
    Date of revision:
    Handle: RePEc:isa:wpaper:34
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    1. Francesco Lippi, 2000. "Revisiting the Case for a Populist Central Banker," Temi di discussione (Economic working papers) 386, Bank of Italy, Economic Research and International Relations Area.
    2. Jerger, Jurgen, 2002. "How strong is the case for a populist central banker? A note," European Economic Review, Elsevier, vol. 46(3), pages 623-632, March.
    3. Francesco Lippi, 2003. "Strategic Monetary Policy with Non-Atomistic Wage Setters," Review of Economic Studies, Oxford University Press, vol. 70(4), pages 909-919.
    4. Maurice Obstfeld & Kenneth Rogoff, 2000. "New Directions for Stochastic Open Economy Models," International Finance 0004002, EconWPA.
    5. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-95, September.
    6. 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.
    7. Steinar Holden, 2001. "Monetary Regimes and the Co-Ordination of Wage Setting," CESifo Working Paper Series 429, CESifo Group Munich.
    8. Coricelli, Fabrizio & Cukierman, Alex & Dalmazzo, Alberto, 2001. "Economic Performance and Stabilization Policy in a Monetary Union with Imperfect Labour and Goods Markets," CEPR Discussion Papers 2745, C.E.P.R. Discussion Papers.
    9. Jordi Gali, 2002. "New Perspectives on Monetary Policy, Inflation, and the Business Cycle," NBER Working Papers 8767, National Bureau of Economic Research, Inc.
    10. 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.
    11. repec:tpr:qjecon:v:115:y:2000:i:1:p:265-284 is not listed on IDEAS
    12. Fabrizio Coricelli & Alex Cukierman & Alberto Dalmazzo, 2006. "Monetary Institutions, Monopolistic Competition, Unionized Labor Markets and Economic Performance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 39-63, 03.
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