Dynamic effects of regulation and deregulation in goods and labour markets

Pasquale Commendatore, Ingrid Kubin

Publication: Working/Discussion PaperWU Working Paper

Abstract

Modern macroeconomic models with a Keynesian flavour usually involve nominal rigidities in wages and goods prices. A typical model is static and combines wage bargaining in the labour markets and monopolistic competition in the goods markets. As central policy implication it follows that deregulating labour and/or goods markets increases equilibrium employment. We reassess the consequences of deregulation in a dynamic model. It still increases employment at the fixed point, which corresponds to the static equilibrium solution. However, deregulation may also lead to stability loss and endogenous fluctuations.
Original languageEnglish
Place of PublicationVienna
PublisherInst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business
Publication statusPublished - 2005

Publication series

NameWorking Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness"
No.49

WU Working Paper Series

  • Working Papers Series \ Growth and Employment in Europe Sustainability and Competitiveness

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