Central Bank Conservatism and Labor Market Reform

Arbeitspapier

How does central bank conservatism affect labor market reform? In this paper we examine the economic forces at work. An increase in conservatism triggers two opposite effects. It reduces the inflation bias of discretionary monetary policy and hence the benefits of a reform. It also increases unemployment variability, which increases the precautionary benefits of a reform. In combination, the two effects produce a u-shaped relation between conservatism and labor market reform. An empirical investigation provides evidence consistent with this prediction.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1999:23

Classification and Topics

• Classification: Wirtschaft ; Central Banks and Their Policies ; Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy ; Wages, Compensation, and Labor Costs: Public Policy
• Subject: Central bank independence ; labor market reform ; credibility ; flexibility ; inflation ; unemployment ; rigidities ; Arbeitsmarktflexibilität ; Zentralbank ; Geldpolitik ; Geldpolitische Transmission ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jordahl, Henrik ; Laséen, Stefan
• Event: Veröffentlichung
• (who): Uppsala University, Department of Economics
• (where): Uppsala
• (when): 1999

Further information

• Handle: http://hdl.handle.net/10419/82948
• URN: urn:nbn:se:uu:diva-2468
• Last update: 10.03.2025, 11:44 AM CET