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Dynamic Effects of Regulation and Deregulation in Goods and Labour Markets

Author

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  • Pasquale Commendatore

    (Università di Napoli 'Federico II')

  • Ingrid Kubin

    (Vienna University of Economics & B.A.)

Abstract

Modern macroeconomic models with a Keynesian flavour usually involve nominal rigidities in wages and goods prices. A typical model is static and combines wage bargaining in the labour markets and monopolistic competition in the goods markets. As central policy implication it follows that deregulating labour and/or goods markets increases equilibrium employment. We reassess the consequences of deregulation in a dynamic model. It still increases employment at the fixed point, which corresponds to the static equilibrium solution. However, deregulation may also lead to stability loss and endogenous fluctuations.

Suggested Citation

  • Pasquale Commendatore & Ingrid Kubin, 2005. "Dynamic Effects of Regulation and Deregulation in Goods and Labour Markets," Working Papers geewp49, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    • Handle: RePEc:wiw:wiwgee:geewp49
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    Cited by:

    1. Noemi Schmitt & Jan Tuinstra & Frank Westerhoff, 2018. "Stability and welfare effects of profit taxes within an evolutionary market interaction model," Review of International Economics, Wiley Blackwell, vol. 26(3), pages 691-708, August.
    2. Tuinstra, Jan & Wegener, Michael & Westerhoff, Frank, 2013. "Positive welfare effects of trade barriers in a dynamic equilibrium model," BERG Working Paper Series 91, Bamberg University, Bamberg Economic Research Group.
    3. FRANCESCO FELICI & Barbara Annicchiarico & Fabio Di Dio, 2012. "Structural Reforms and the Potential Effects on the Italian Economy," EcoMod2012 5073, EcoMod.
    4. Annicchiarico, Barbara & Di Dio, Fabio & Felici, Francesco, 2013. "Structural reforms and the potential effects on the Italian economy," Journal of Policy Modeling, Elsevier, vol. 35(1), pages 88-109.
    5. Tuinstra, Jan & Wegener, Michael & Westerhoff, Frank, 2014. "Positive welfare effects of trade barriers in a dynamic partial equilibrium model," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 246-264.
    6. Barbara Annicchiarico & Fabio Di Dio & Francesco Felici, "undated". "The Macroeconomics of Europe 2020 Reform Strategy and the Potential Effects on the Italian Economy," Working Papers 8, Department of the Treasury, Ministry of the Economy and of Finance.
    7. Valentin Marian ANTOHI & Monica Laura ZLATI, 2018. "The impact of profit taxation on the financial solvency of economic agents," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 43-55.

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    More about this item

    Keywords

    Labour and goods markets deregulation; monopolistic competition; business cycles;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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