Suchergebnisse

This paper extends Svensson and Woodford's (2003) partial information framework by allowing the private agents to achieve robustness against incomplete information about the structure of the economy by distorting their expectations in a particular direction.It shows how a linear rational expectations equilibrium under concern for robustness can be solved by exploiting the recursive structure of the problem and appropriately modifying the Bellman equations in their framework.The standard Kalman filter is then used for information updating under imperfect measurement of the state variables.The standard New Keynesian model is used for illustrating how concern for modelling errors interacts with imperfect information.Agents achieve robustness by simultaneously over-estimating the persistence of exogenous shocks, but under-estimating the policy response to the output gap.This under-estimation, combined with imperfect measurement, leads to larger and more persistent responses of private consumption to government expenditure shocks under robust expectations.

In this study, the determination of optimal monetary policy in unionised economies is considered from the new political economy point of view.In the empirical part of the study it is shown that, in addition to the institutional position of the central bank, labour market institutions also matter for successful anti- inflationary policy.As regards the position of the central bank, the results suggest that it is important to distinguish between the political independence of the bank and the independence of its personnel.Whereas the former helps to reduce inflation, the latter seems to produce lower unemployment and wage increases.As regards the effects of labour market institutions, the results indicate that co-ordination in wage bargaining is generally beneficial to inflation and employment, but that large differences between union density and coverage rates lead to higher wage increases and unemployment. The theoretical part of the study considers interaction between monetary policy and wage determination in unionised economies.It is shown how the benefits of delegating monetary policy to an independent, conservative central bank depend on the degree of centralisation or decentralisation in wage determination.If unions act as leaders in the "inflation game", which could happen if wage contracts are of very long duration, output in the economy remains inefficiently small.The size of this problem is the greater the more accommodative monetary policy is and the higher is the degree of centralisation in labour markets.It may be beneficial for the unions to give up their leadership position in the determination of inflation.

This paper studies the relationship between central bank independence, wage bargaining structure and macroeconomic performance in OECD countries.A cross-sectional time-series (TSCS) model for inflation, nominal wage growth and unemployment for the period 1973-1996 is estimated using different and updated measures of central bank independence.The importance of the price stability objective in the central bank statute is used as a proxy for the degree of conservativeness of the central bank.A recently published data set on wage bargaining structure is used, and a distinction is made between coordination of wage bargaining and formal centralization.A new measure of union power is constructed, which combines formal centralization and union density.The implications of the large differences that can be seen between coverage and unionization rates in some countries are briefly discussed.Two important results emerge.First, the central bank's political independence and personnel independence contribute most importantly to a successful inflation policy.Second, a high level of coordination contributes to moderate inflation rates and unemployment, while union monopoly power tends to increase inflation.

Both the optimal inflation target and the optimal degree of output stabilization are found to be conditional on the prevailing wage bargaining structure.If monopolistic wage setters act as strategic leaders of the monetary policy game, an explicit inflation targeting regime removes inflation bias from monetary policy, but does not remove the trade-off related to average level of output and output stabilization.In contrast to usual results on inflation targeting, appointing a central banker who is more conservative than the government leads to welfare gains for society.If centralization within the national labor markets increases in the common monetary policy area, the monetary policy game with regard to the European Central Bank might be conducted under the strategic leadership of trade union confederations.This leads to a Pareto loss.

AbstractThe implications of centralised wage setting for the relationship between taxation, wages and employment are studied allowing for endogenous adjustment in work hours. We show that centralisation promotes wage moderation, makes wages and employment less sensitive to changes in wage taxation and reduces the hours worked. With an individual supply of working hours, a wage tax can even improve employment if wage setting is centralised and marginal utility from a public good is sufficiently high. Moreover, if a profit tax is used to finance public expenditure, higher tax reduces wages and improves employment.