Effects of product and labor market regulation on macroeconomic outcomes

Francesco Zanetti

Journal of Macroeconomics, 2009, vol. 31, issue 2, pages 320-332

Abstract: This paper develops a New Keynesian model with labor search to investigate the effects of product and labor market regulation on macroeconomic outcomes. Product market regulation is proxied by the firm's price markup, and labor market regulation by the worker's bargaining power over the real wage. The results indicate that an increase in both types of regulation leads to a decline in macroeconomic fluctuations, and increases the importance of technology shocks in explaining movements in labor market tightness and employment.

Keywords: Product; market; regulation; Labor; market; regulation; New; Keynesian; model; Labor; market; search (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:jmacro:v:31:y:2009:i:2:p:320-332

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