Labor market institutions and inflation volatility in the euro area

Campolmi, Alessia; Faia, Ester

doi:10.1016/j.jedc.2010.07.001

Cited by 66 publications

(60 citation statements)

References 40 publications

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“…The probability of filling a vacancy q is typically set between 0.7 (den Haan, Ramey, and Watson (2000) and Krause and Lubik (2007)) and 0.9 (Andolfatto (1996) and Hairault (2002)). We choose the lower bound of values used in the literature, since a lower probability seems more in line with the European case (see Campolmi and Faia (2011)). …”

Section: Labour Marketmentioning

confidence: 99%

The German Labour Market Reforms in a European Context: A DSGE Analysis

Busl

Seymen

2013

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Abstract While a widespread consensus exists among macroeconomists that the German labour market reforms in [2003][2004][2005] have successfully contributed to the decline of the unemployment rate, critics claim that the reforms led to wage restraint and consequently consumption dampening accompanied by beggar-thy-neighbour effects, harming Germany's trade partners. We check up on the validity of these arguments by means of a two-country DSGE model featuring intra-industry trade and labour market frictions. Our results suggest that the disproportional growth of GDP (labour productivity) in comparison to consumption (wages) are only partially driven by the reforms. However, we do not find that the reforms contribute to Germany's trade surplus and cause negative spillovers to trading partners in terms of output and employment. The German Labour Market Reforms in a EuropeanJEL classification: E24, E61, E65, F42, J38, J63

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Section: Labour Marketmentioning

confidence: 99%

The German Labour Market Reforms in a European Context: A DSGE Analysis

Busl

Seymen

2013

SSRN Journal

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“…Likewise, it has been shown that labor market institutions matter for the adjustment of wages and job flows to external shocks [9]. The main channel is the one highlighted so far.…”

Section: Exchange Rate Fluctuationsmentioning

confidence: 86%

“…All countries are exposed to the same worldwide external shocks. However, since they have different labor market institutions they react differently to the same external shock [9]. Since the European Central Bank decides on a common monetary policy, the question arises as to whether it should take into account those differences across countries and how they affect the various countries' responses to external shocks.…”

Section: Exchange Rate Effects Within a Currency Areamentioning

confidence: 99%

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Competitiveness, labor market institutions, and monetary policy

Faia¹

2017

izawol

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“…However, open economy models rarely feature search and matching frictions in the labour market. Hairault (2002) and Campolmi and Faia (2011) …”

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confidence: 99%

Commodity Prices and Labour Market Dynamics in Small Open Economies

Bodenstein

Kamber²,

Thoenissen

2016

SSRN Journal

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We investigate the connection between commodity price shocks and unemployment in advanced resource-rich small open economies from an empirical and theoretical perspective. Shocks to commodity prices are shown to influence labour market conditions primarily through the real exchange rate contrasting sharply with the transmission of technology shocks which are typically argued to affect the economy by changing labour productivity. The empirical impact of commodity price shocks is obtained from estimating a panel vector autoregression; a positive price shock is found to be expansionary for the components of GDP, causes the real exchange rate to appreciate, and improves labour market conditions. For every one percent increase in commodity prices, our estimates suggest a one basis point decline in the unemployment rate and at its peak a 0.3% increase in unfilled vacancies. We then match the impulse responses to a commodity price shock from a small open economy model with net commodity exports and search and matching frictions in the labour market to these empirical responses. As in the data, an increase in commodity prices raises consumption demand in the small open economy and induces a real appreciation. Facing higher relative prices for their goods, non-commodity producing firms post additional job vacancies, causing the number of matches between firms and workers to rise. As a result, unemployment falls, even if employment in the commodity-producing sector is negligible. For commodity price shocks, there is little difference between the standard Diamond (1982), Mortensen (1982), and Pissarides (1985) approach of modelling search and matching frictions and the alternating offer bargaining model suggested by Hall and Milgrom (2008).JEL classifications: E44, E61, F42.

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Labor market institutions and inflation volatility in the euro area

Cited by 66 publications

References 40 publications

The German Labour Market Reforms in a European Context: A DSGE Analysis

The German Labour Market Reforms in a European Context: A DSGE Analysis

Competitiveness, labor market institutions, and monetary policy

Commodity Prices and Labour Market Dynamics in Small Open Economies

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