1,721,041 research outputs found
Natural resources and environment preservation. Strategic substitutability vs. complementarity in global and local public good provision
No full textEnvironment is a public good whose preservation requires some type of intervention. Use of natural resources for economic activities should be regulated by the local communities; however, this can have in turn external effects on other communities. Environment then takes the double nature of local and global public good, requiring intervention of different levels of governments, whose interplay may raise further conflicts. The aim of this paper is twofold. First, we survey the literature on conflicts arising from the alternative uses of land and natural resources and discuss the effects and policy implications of the interplay between different governments. Second, we focus on the role of strategic interactions in the environmental governance and the implied policy trade-offs and present a formal policy game with potential conflicts between central and local authorities. The model aims to describe the circumstances according to which the lack of coordination between local and central authorities leads to under- or over-provision of natural resources and environment preservation
The macroeconomics of social pacts
No full textIn this paper we analyze macroeconomic interactions among trade unions, the central bank and the fiscal policymaker. We explicitly model trade unionsconcern for public expenditure, paving the way for an analysis of the potential gains from cooperation between the fiscal policymaker and the trade unions, i.e. the so-called corporatist or social pacts that have characterized economic policies in a number of European countries in the last few decades. We also show that central bank conservatism or administrative ceilings on public expenditure may be ineffective, as tax rates and real wage claims are strategic substitutes
Trend inflation as a workers' discipline device
No full textThe paper shows that a monetary policy regime that allows for a positive inflation rate disciplines monopolistic wages setters if these, when setting contracts, internalize the consequences of their choices for economic outcomes over the life of the contract. We also show that discretionary monetary policy has real effects when wage setters are non atomistic, whereas commitment to a positive inflation rate is effective irrespective of the degree of labor market centralization. Finally, the model may explain the different unemployment dynamics in Europe and in the United States, following the 1980 disinflationary episode. Our approach suggests that disinflation induced an adverse effect on the labor market wedge and that such effect was stronger in Europe, due to the particular importance of large wage setters. © 2012 Springer Science+Business Media, LLC
Inflation targets and endogenous wage markups in a New Keynesian model
No full textEmpirical contributions show that wage re-negotiations take place while expiring contracts are still in place. This is captured by assuming that nominal wages are pre-determined. As a consequence, wage setters act as Stackelberg leaders, whereas in the typical New Keynesian model the wage-setting rule implies that they play a Nash game. We present a DSGE New Keynesian model with pre-determined wages and money entering the representative household's utility function and show how these assumptions are sufficient to identify an inverse relationship between the inflation target and the wage markup (and thus employment) both in the short and the long run. This is due to the complementary effects that wage claims and the inflation target have on money holdings. Model estimates suggest that a moderate long-run inflation rate generates non-negligible output gains. © 2012 Elsevier Inc
U.S. trend inflation reinterpreted: the role of fiscal policies and time-varying nominal rigidities
No full textThis paper offers a reinterpretation of the Fed's time-varying implicit inflation target, based on two considerations. The first is that the need to alleviate the burden of distortionary taxation may justify the choice of a positive inflation rate. The second is based on compelling evidence that the degree of price and wage indexation falls with trend inflation. In fact, we find that a proper characterization of the joint evolution of fiscal variables and nominal rigidities has a strong impact on the Ramsey optimal policies, implying optimal inflation dynamics that are consistent with the observed evolution of U.S. trend inflation. By contrast, tax policies have been too lax, especially at the time of the controversial Bush tax cuts. Copyright © Cambridge University Press 201
Trend inflation, the labor market wedge, and the non-vertical Phillips curve
No full textRecent developments in macroeconomics resurrect the view that welfare costs of inflation arise because the latter acts as a tax on money balances. Empirical contributions show that wage re-negotiations take place while expiring contracts are still in place. Bringing these seemingly unrelated aspects together in a stylized general equilibrium model, we find a disciplining effect of a positive inflation target on the wage markup and identify a long-term trade-off between inflation and output. This has important policy implications, ranging from the opportunity of revising the target in response to shocks, to the possibility of exploiting inflation as a tool to increase tax revenues via its employment-enhancing effect
Trend inflation, endogenous mark-ups and the non-vertical Phillips curve
No full textRecent developments in macroeconomics resurrect the view that wel- fare costs of inflation arise because the latter acts as a tax on money balances. Empirical contributions show that wage re-negotiations take place while expiring contracts are still in place. Bringing these seemingly unrelated aspects together in a stylized general equilibrium model, we ?nd a disciplining e¤ect of a positive inflation target on the wage markup and identify a long-term trade-off between in?ation and outpu
"The comeback of inflation as a public finance tool"
No full textWe challenge the widely held belief that New Keynesian
models cannot predict optimal positive inflation rates. In fact,
interest rates are justified by the Phelps argument that monetary
financing can alleviate the burden of distortionary taxation.
We obtain this result because, in contrast with previous
contributions, our model accounts for public transfers
as a component of fiscal outlays. We also contradict the view
that the Ramsey policy should minimize inflation volatility
and induce near-random-walk dynamics of public debt in the
long run. In our model it should instead stabilize debt-to-GDP
ratios in order to mitigate steady-state distortions. Our results
thus provide theoretical support to policy-oriented analyses
which call for a reversal of debt accumulated in the aftermath
of the 2008 financial crisi
Loops, Learning and the Phillips Curve
No full textThe objective of the chapter is to reconsider three topics, one analytical and two of economic policy, that have been at the core of Tarantelli's contribution. The existence of a long-run Phillips curve is the theoretical problem, while the degree of indexation and the role of neo-corporativism are the policy subjects
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