Dynamic effects of regulation and deregulation in goods and labour markets

Ingrid Kubin, Pasquale Commendatore

Publication: Scientific journalJournal articlepeer-review


It has been argued in recent economic literature that deregulation in both product and labour markets has beneficial impacts on employment and on real wages. The results offered to support this argument, however, are controversial. So far the debate has been concerned with comparative static results. This paper reassesses the consequences of deregulation in a dynamic context. In our model—a dynamic counterpart of Blanchard and Giavazzi's prototype model—liberalisation in product and/or labour markets also increases the equilibrium employment and wage rates. However, with boundedly rational firms and trade unions, deregulation may generate endogenous fluctuations.
Original languageEnglish
Pages (from-to)517 - 538
JournalOxford Economic Papers New Series
Issue number3
Publication statusPublished - 2009

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