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Labour Market and Monetary Policy Reforms in the UK: a Structural Interpretation of the Implications

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  • Francesco Zanetti

Abstract

This paper estimates a New Keynesian model to investigate to what extent labour market reforms undertaken by the Thatcher government in the late 1930s and the introduction of a constant inflation target in 1992 might have changed the UK economic outlook if they had been introduced in the early 1970s. The results suggest that a stronger reaction to deviations of inflation from target have contributed to a more stable economic outlook, while labour market reforms and the introduction of a constant inflation target are unlikely to have produced a different outcome.

Suggested Citation

  • Francesco Zanetti, 2014. "Labour Market and Monetary Policy Reforms in the UK: a Structural Interpretation of the Implications," Economics Series Working Papers 702, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:702
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    File URL: http://www.economics.ox.ac.uk/materials/papers/13333/paper702.pdf
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    References listed on IDEAS

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    Cited by:

    1. Wesselbaum, Dennis, 2015. "Sectoral labor market effects of fiscal spending," Structural Change and Economic Dynamics, Elsevier, vol. 34(C), pages 19-35.
    2. Francesco Zanetti & Haroon Mumtaz, 2014. "Labor Market Dynamics: a Time-varying Analysis," Economics Series Working Papers 728, University of Oxford, Department of Economics.
    3. Haroon Mumtaz & Francesco Zanetti, 2015. "Labor Market Dynamics: A Time-Varying Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(3), pages 319-338, June.

    More about this item

    Keywords

    Labour market reforms; Search and matching; New Keynesian model;

    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
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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