Corporatism and macroeconomic stabilization policies
This paper analyzes corporatism in a two-player game which integrates macroeconomic stabilization policy and a policy of social transfers. The government decides on the level of nominal social transfers, and the trade union decides on the nominal wage level. A central finding is that if one assumes that the trade union’s utility not only depends on employment, output and inflation, but also on the level of social transfers, there is always scope for Pareto-improvements, relative to the noncooperative Nash equilibrium. In particular, there always exists a bargained combination of lower wages and higher social benefits that is beneficial for both players. Another important result is that an increase in the degree of inflation aversion of the trade union leads to a lower wage level, a lower level of inflation and a higher level of output. The effect on social transfers depends, among other things, on the degree of inflation aversion of the government. Finally, the paper provides a detailed analysis of when the wage level and the level of social transfers are strategic complements or substitutes for each of the players.
(This abstract was borrowed from another version of this item.)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Burda, Michael C., 1997. "Corporatism, labor unions and the safety net," European Economic Review, Elsevier, vol. 41(3-5), pages 635-646, April.
- DI BARTOLOMEO, Giovanni & PAUWELS, Wilfried, 2002. "The issue of instability in a simple policy game between the central bank and the representative union," Working Papers 2002009, University of Antwerp, Faculty of Applied Economics.
- Acocella, Nicola & Di Bartolomeo, Giovanni & Pauwels, Wilfried, 2007.
"Is there any scope for corporatism in stabilization policies?,"
3584, University Library of Munich, Germany.
- Giovanni Di Bartolomeo & Nicola Acocella & Wilfried Pauwels, 2004. "Is There any Scope for Corporatism in Stabilization Policies?," Working Papers 2009.154, Fondazione Eni Enrico Mattei.
When requesting a correction, please mention this item's handle: RePEc:ter:wpaper:0007. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Giovanni Di Bartolomeo)
If references are entirely missing, you can add them using this form.