Counter-Inflationary Policy in a Unionised Economy with Non-Synchronised Wage Setting
1984 (English)Report (Other academic)
This paper presents a model of the determination of wages and employment in a unionised economy with non-synchronised wage-setting. It is shown that a monetary deflation can lead to prolonged unemployment even though the unions act rationally and with full information about the change in policy. The model generates a "statistical" Phillips curve in which the rate of change of money wages depends on the anticipated growth rate of the money supply and on "disequilibrium" unemployment. Conventional incomes policies are shown to have desirable social effects but run counter to the perceived self-interest of the trade unions and are therefore likely to be resisted. taxes on wage increases have desirable long-run effects, but do not appear able to reduce the transitional unemployment costs of monetary deflation.
Place, publisher, year, edition, pages
Stockholm: IIES , 1984. , 39 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 302
IdentifiersURN: urn:nbn:se:su:diva-41324OAI: oai:DiVA.org:su-41324DiVA: diva2:329494
Published in connection with a visit at the IIES2010-07-122010-07-122010-07-12