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The macroeconomics of social pacts

  • Acocella Nicola
  • Di Bartolomeo Giovanni
  • Tirelli Patrizio

In this paper we analyze macroeconomic interactions between trade unions, the central bank and the fiscal policymaker. We explicitly model unions’ concern for public expenditure, paving the way for an analysis of the potential gains from cooperation between the fiscal policymaker and the unions, i.e. the so-called corporatist or social pacts that have characterized economic policies in a number of European countries in the last few decades. We also highlight the profoundly different incentives generated by institutional arrangements such as the Maastricht criteria and the Stability and Growth Pact. The former has unambiguously induced more efficient outcomes; the latter is likely to backfire!

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Paper provided by Department of Communication, University of Teramo in its series wp.comunite with number 0028.

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Date of creation: Nov 2007
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Handle: RePEc:ter:wpaper:0028
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