Wage Setters, Central Bank Conservatism and Economic Performance

Clemente De Lucia
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Clemente De Lucia: ISAE - Institute for Studies and Economic Analyses

No 34, ISAE Working Papers from ISTAT - Italian National Institute of Statistics - (Rome, ITALY)

Abstract: This work analyses the relationship among wage setters, Central Bank conservatism and economic performance. The main findings are that we can not confirm the so called Calmfors-Driffill effect. Key parameter is the elasticity of substitution between labor types, or , which affects the unions' market power. It emerges that with high values of decentralized economies, rather than centralized ones, face lower levels of inflation and unemployment. The opposite occurs with low values of . Dealing with the conservatism of the Central Bank, the paper shows that an ultra conservative central banker, rather than a populist one is able to maximize the welfare of a society.

Keywords: Key Words: Non Atomistic Agents; Conservatism; Wage Bargaining (search for similar items in EconPapers)
JEL-codes: E5 J5 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2003-04
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