Intertemporale Output- und Beschäftigungseffekte angebotsorientierter Politikmaßnahmen in einer Währungsunion / Short- and Long-run Effects of Supply Side Policies within a Currency Union

Hans-Werner Wohltmann and Bulthaupt Frank
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Bulthaupt Frank: Institut für Theoretische Volkswirtschaftslehre der Christian-Albrechts-Universität zu Kiel, Wilhelm-Seelig-Platz 1, D-24118 Kiel

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 1999, vol. 218, issue 1-2, 1-22

Abstract: The paper analyses the short-, intermediate- and long-run effects of anticipated supply side policies within a two-country model of a currency union that is characterized by perfect foresight dynamics, saddle-point stability and the incorporation of intermediate goods imports. We show that both a reduction of labor extra-costs and a revenue neutral cut in the employers’ contribution to the social security has indeterminate short-run effects resulting from an ambiguous exchange-rate jump in the announcement interval. However, the policies achieve in the long-run an unambiguous rise in aggregate output and employment. The employment increase is stronger than the output expansion due to a decline in the producers’ real wage rate and a rise in the real factor price of the intermediate goods imports. Our results display positive long-run output and employment effects as well, if the employers’ and the employees’ contributions to the social security are reduced simultaneously and the revenue loss is compensated by an under-proportional rise of the VAT-rate. Unilateral supply side policies have ambiguous spillover effects in the second member country of the union.

Keywords: Supply side policies; currency union; dynamic two country model; perfect foresight dynamics; employer’s contribution to the social security; Angebotspolitik; Währungsunion; dynamisches Zwei-Länder-Modell; perfekte Voraussicht; Arbeitgeberanteil zur Sozialversicherung; Supply side policies; currency union; dynamic two country model; perfect foresight dynamics; employer’s contribution to the social security (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:218:y:1999:i:1-2:p:1-22

DOI: 10.1515/jbnst-1999-1-202

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