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NAIRU: Incomes Policy and Inflation

  • Silvia Fabiani
  • Alberto Locarno
  • Gian Paolo Oneto
  • Paolo Sestito

Italy has been one of the few industrial countries resorting to incomes policy in the current decade. Many Italian observers have attributed to this policy the remarkable slowdown in wage and price inflation. However, no apparent progress has been made concerning labour market unbalances, as the unemployment rate remains 4 percentage points above the already high level inherited from the 80s. This paper analyses this experience: it looks at the evidence of changes in the bargaining structure stemming from the incomes policies agreements, discusses their possible long run impact in terms of NAIRU and features of the inflationary process, presents a quantitative assessment of the specific contribution of those agreements to the inflation outcome. The analysis is carried out by looking at the presence of structural breaks in an aggregate-wage equation and resorting to counterfactual simulations of a large macroeconomic model (the Bank of Italy quarterly model). The empirical results ... L’Italie a été l’un de rares pays à recourir à une politique des revenus pendant cette décennie. De nombreux observateurs italiens ont attribué à cette politique le remarquable ralentissement de l’inflation des salaire et des prix. Toutefois, aucun progrès apparent n’a été réalisé concernant les déséquilibres du marché du travail, le taux de chômage restant 4 points plus haut que son niveau déjà élevé des années 80. Cet article analyse cette expérience: il examine les effets du changement de l’organisation des négociations salariales lié aux accords de politiques des revenus, discute leurs éventuelles conséquences à long terme sur le NAIRU et les caractéristiques du processus d’inflation et fournit une évaluation quantitative de la contribution de ces accords sur les performances d’inflation. L’analyse est effectuée à partir d’une recherche des ruptures structurelles de l’équation de salaire à un niveau agrégé et de simulations à l’aide d’un modèle macro-économique de grande taille ...

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 187.

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Date of creation: 1997
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Handle: RePEc:oec:ecoaaa:187-en
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