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Full-Text Articles in Social and Behavioral Sciences
A Reappraisal Of The Inflation-Unemployment Tradeoff, Marika Karanassou, Hector Sala, Dennis Snower
A Reappraisal Of The Inflation-Unemployment Tradeoff, Marika Karanassou, Hector Sala, Dennis Snower
Dennis Snower
This paper offers a reappraisal of the inflation-unemployment tradeoff, based on "frictional growth", describing the interplay between nominal frictions and money growth. Whe the money supply growth in the presence of price inertia (due to staggered wage contracts with time discounting), the price adjustments to each successive change in the money supply are never able to work themselves out fully. In this context, temporary nominal rigidities let monetary policy have permanent real effects. Although our theory contains no money illusion, no permanent nominal rigidities, and no departure from rational expectations, there is a long-run inflation-unemployment tradeoff. Our empirical analysis suggests …
The Real Effects Of Money Growth In Dynamic General Equilibrium, Liam Graham, Dennis Snower
The Real Effects Of Money Growth In Dynamic General Equilibrium, Liam Graham, Dennis Snower
Dennis Snower
Dynamic New Keynesian models generally ignore steady state money growth. Within a standard New Keynesian framework, we show that the interaction between staggered nominal contracts and money growth leads to a long-run trade-off between output and money growth that is significant, and remains so when the contract length is endogenised. We show that the existence of the tradeoff depends crucially on a phenomenon we call employment cycling: firms’ substitution among different labor types over the course of the contract period. We discuss the plausibility of this phenomenon and show that when it is absent, money becomes super-neutral.
Unemployment In The European Union: A Dynamic Reappraisal, Marika Karanassou, Hector Sala, Dennis Snower
Unemployment In The European Union: A Dynamic Reappraisal, Marika Karanassou, Hector Sala, Dennis Snower
Dennis Snower
This paper examines the movements in EU unemployment from two perspectives: (a) the NRU/NAIRU perspective, in which unemployment movements are attributed largely to changes in the long-run equilibrium unemployment rate and (b) the chain-reaction perspective, in which unemployment movements are viewed as the outcome of the interplay between labor market shocks and prolonged lagged adjustment processes. We present an empirical analysis that distinguishes between unemployment movements arising from long-run equilibrium changes and those arising from lagged intertemporal adjustments. This analysis has far-reaching policy implications. Our analysis shows that the rise in EU unemployment over the 1970s and first part of …
The Return Of The Long-Run Phillips Curve, Liam Graham, Dennis Snower
The Return Of The Long-Run Phillips Curve, Liam Graham, Dennis Snower
Dennis Snower
This paper shows that the interaction between money growth and staggered nominal contracts gives rise to a long-run inflation-unemployment tradeoff.
Policy Complementarities: The Case For Fundamental Labor Market Reform, Dennis Snower, David T. Coe
Policy Complementarities: The Case For Fundamental Labor Market Reform, Dennis Snower, David T. Coe
Dennis Snower
The paper analyzes complementarities among a variety of labor market policies. It shows that (a) a wide range of labor market institutions (.e.g unemployment benefits, job security legislation, and payroll taxes) have complementary effects on unemployment and thus (b) policies aimed at reforming these institutions are also complementary. These policy complementarities imply that partial labor market reform (directed at one institution, while leaving the other institutions in place) is unlikely to achieve significant reductions in unemployment. Rather labor market reform becomes particularly effective only once a broad range of institutional rigidities are dismantled simultaneously and the distributional objectives of the …
Expanding The Welfare System, Michael J. Orszag, Dennis Snower
Expanding The Welfare System, Michael J. Orszag, Dennis Snower
Dennis Snower
The proposal involves the establishment of “welfare accounts” for every person in a country. There are to be four accounts: a retirement account (covering pensions), an unemployment account (covering unemployment support), a human capital account (covering education and training), and a health account (covering insurance against sickness and disability). Instead of the current welfare state systems - where welfare services are financed predominantly out of general taxes - people would make ongoing, mandatory contributions to each of these welfare accounts. The balances in these accounts would cover people’s major welfare needs. The government is to set mandatory minimum contribution rates …