Comment on L. Calmfors and H. Horn, “Classical Unemployment, Accommodation Policies and the Adjustment of Real Wages”

Lars Jonung () and Richard Layard
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Richard Layard: London School of Economics

A chapter in Trade Unions, Wage Formation and Macroeconomic Stability, 1986, pp 120-127 from Palgrave Macmillan

Abstract: Abstract The aim of this paper is to develop a framework for analyzing the causes of stagflation in an economy with centralized wage setting by a nationwide monopoly union. A basic conclusion is that in such an institutional setting, a full employment policy which accommodates wage disturbances may cause reduction of employment in the private sector and deterioration of the government budget. The model also predicts that the policy has consequences for the allocation of resources between the private and public sector. In fact, the authors develop implicitly a model of long–run public sector growth arising from accommodation policy.

Keywords: Real Wage; Centralise Union; Government Behavior; Bretton Wood System; Popularity Function (search for similar items in EconPapers)
Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-08596-5_7

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DOI: 10.1007/978-1-349-08596-5_7

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