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- Macroeconomics (6)
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- Unemployment (5)
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- Emplyment and Unemployment (3)
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- Nominal inertia (3)
- Forward-looking expectations (2)
- Inflation (2)
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- Inflation-Unemployment Tradeoff (1)
- Inflation-unemployment tradeoff (1)
- Inflation-unemployment tradeoff; Phillips curve; Staggered wage contracts; Nominal inertia; Forward-looking expectations; Monetary policy (1)
- Information flows (1)
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Articles 1 - 17 of 17
Full-Text Articles in Social and Behavioral Sciences
Long-Run Inflation-Unemployment Dynamics: The Spanish Phillips Curve And Economic Policy, Dennis Snower, Marika Karanassou, Hector Sala
Long-Run Inflation-Unemployment Dynamics: The Spanish Phillips Curve And Economic Policy, Dennis Snower, Marika Karanassou, Hector Sala
Dennis Snower
This paper takes a new look at the long-run dynamics of inflation and unemployment in response to permanent changes in the growth rate of the money supply.We examine the Phillips curve from the perspective of what we call “frictional growth,” i.e. the interaction between money growth and nominal frictions. After presenting a theoretical model of this phenomenon, we construct an empirical model of the Spanish economy and, in this context, we evaluate the long-run inflation-unemployment tradeoff for Spain and examine how recent policy changes have affected it.
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 …
Long-Run Inflation-Unemployment Dynamics: The Spanish Phillips Curve And Economic Policy, Marika Karanassou, Hector Sala, Dennis Snower
Long-Run Inflation-Unemployment Dynamics: The Spanish Phillips Curve And Economic Policy, Marika Karanassou, Hector Sala, Dennis Snower
Dennis Snower
This paper takes a new look at the long-run dynamics of inflation and unemployment in response to permanent changes in the growth rate of the money supply. We examine the Phillips curve from the perspective of what we call “frictional growth”, i.e. the interaction between money growth and nominal frictions. After presenting theoretical models of this phenomenon, we construct an empirical model of the Spanish economy and, in this context, we evaluate the long-run in‡ation-unemployment tradeo¤ for Spain and examine how recent policy changes have a¤ected it.
Can Insider Power Affect Employment?, Dennis Snower, Pilar Diaz-Vazquez
Can Insider Power Affect Employment?, Dennis Snower, Pilar Diaz-Vazquez
Dennis Snower
Do firms reduce employment when their insiders (established, incumbent employees) claim higher wages? The conventional answer in the theoretical literature is that insider power has no in‡uence on employment, provided that the newly hired employees (entrants) receive their reservation wages. The reason given is that an increase in insider wages gives rise to a countervailing fall in reservation wages, leaving the present value of wage costs unchanged. Our analysis contradicts this conventional answer. We show that, in the context of a stochastic model of the labor market, an increase in insider wages promotes firing in recessions, while leaving hiring in …
Labor Market Institutions And Macroeconomic Shocks, Yu-Fu Chen, Dennis Snower, Gylfi Zoega
Labor Market Institutions And Macroeconomic Shocks, Yu-Fu Chen, Dennis Snower, Gylfi Zoega
Dennis Snower
Macroeconomic shocks and labour-market institutions jointly determine employment growth and economic performance. The effect of shocks depends on the nature of these institutions and the effect of institutional change depends on the macroeconomic environment. It follows that a given set of institutions may be appropriate in one epoch and not in another. We derive a dynamic model of labour demand in which the effect of firing costs on labour demand depends on the macroeconomic environment: When the level of macroeconomic activity is expected to drop and/or the trend rate of productivity growth is small, a rise in firing costs affects …
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.
An Anatomy Of The Phillips Curve, Marika Karanassou, Hector Sala, Dennis Snower
An Anatomy Of The Phillips Curve, Marika Karanassou, Hector Sala, Dennis Snower
Dennis Snower
The paper examines how the long-run inflation-unemployment tradeoff depends on the degree to which wage-price decisions are backward- versus forward-looking. When economic agents, facing time-contingent, staggered nominal contracts, have a positive rate of time preference, the current wage and price levels depend more heavily on past variables (e.g. past wages and prices) than on future variables. Consequently, the long-run Phillips curve becomes downward-sloping and, indeed, quit flat for plausible parameter values. This paper provides an intuitive account of how this long-run Phillips curve arises.
Multi-Task Learning And The Reorganization Of Work, Assar Lindbeck, Dennis Snower
Multi-Task Learning And The Reorganization Of Work, Assar Lindbeck, Dennis Snower
Dennis Snower
The paper analyzes an important aspect of the contemporary reorganization of work within firms: the shift from “Tayloristic” organization (characterized by specialization by tasks) to “holistic” organization (featuring job rotation, integration of tasks and learning across tasks). We examine four driving forces behind this restructuring process: advances in production technologies promoting technological task complementarities, advances in information technologies promoting informational task complementarities, changes in worker preferences in favor of versatile work, and advances in human capital that make workers more versatile. Our analysis can also help explain the recent widening of wage differentials and disparities in job opportunities, not only …
Adjustment Dynamics And The Natural Rate, Brian Henry, Marika Karanassou, Dennis Snower
Adjustment Dynamics And The Natural Rate, Brian Henry, Marika Karanassou, Dennis Snower
Dennis Snower
This paper challenges what is the standard account of UK employment, namely that the major swings in unemployment over the past 25 years are due to predominantly to movements in the underlying empirical natural rate of unemployment (NRU). Our analysis suggests that the UK NRU has remained reasonably stable through time and that the medium-run swings in unemployment are due, instead, to very prolonged after-effects of persistent (transitory but long-lasting) shocks. We argue that (i) past UK labour market shocks have prolonged after-effects on unemployment due to interactions among different lagged adjustment proceses in the labour market; (ii) many of …
Creating Employment Incentives, Dennis Snower
Price Dynamics And Production Lags, Assar Lindbeck, Dennis Snower
Price Dynamics And Production Lags, Assar Lindbeck, Dennis Snower
Dennis Snower
This paper provides a new explanation of why inflation is sluggish in response to aggregate demand shocks and why aggregate output changes as result of such shocks. We argue that these phenomena are related to lags between inputs and outputs in the production process, “production lags” for short. The broad intuition is that production activities in a modern economy are interconnected thr ough complex input-output relations, with production lags within individual firms, and that it takes considerable time for cost and price changes to penetrate the entire inputoutput system. Our analysis provides a rationale for a prolonged inverse relation between …
Causes Of Changing Earnings Inequality, Dennis Snower
Causes Of Changing Earnings Inequality, Dennis Snower
Dennis Snower
No abstract provided.
A Manifesto On Unemployment In The European Union, Jean-Paul Fitoussi, Franco Modigliani, Beniamino Moro, Dennis J. Snower, Robert Solow
A Manifesto On Unemployment In The European Union, Jean-Paul Fitoussi, Franco Modigliani, Beniamino Moro, Dennis J. Snower, Robert Solow
Dennis Snower
No abstract provided.
Anatomy Of Policy Complementarities, Michael J. Orszag, Dennis Snower
Anatomy Of Policy Complementarities, Michael J. Orszag, Dennis Snower
Dennis Snower
No abstract provided.
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 …