A Macroeconomics Model and Stabilisation Policies for the OPEC Countries

The Relationship between Output and Unemployment with Efficiency Wages

German Economic Review ◽

10.1111/j.1468-0475.2007.00418.x ◽

2007 ◽

Vol 8 (4) ◽

pp. 561-577 ◽

Cited By ~ 4

Author(s):

Jim Malley ◽

Hassan Molana

Keyword(s):

Adverse Effects ◽

Labour Market ◽

Negative Relationship ◽

Efficiency Wages ◽

Market Imperfections ◽

Supply Side ◽

Demand Shock ◽

The Relationship ◽

German Data ◽

Stabilisation Policies

Abstract We construct a stylised model of the supply side with goods and labour market imperfections to show that an economy can rationally operate at a low-effort state in which the relationship between output and unemployment is positive. We examine data from the G7 countries over 1960-2001 and find that only German data strongly favour a persistent negative relationship between the level of output and rate of unemployment. The consequence of this is that circumstances exist in which market imperfections could pose serious obstacles to the smooth working of expansionary and/or stabilisation policies and a positive demand shock might have adverse effects on employment.

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Economic thought at the European Commission and the creation of EMU (1957-1991)

HISTORY OF ECONOMIC THOUGHT AND POLICY ◽

10.3280/spe2010-002004 ◽

2011 ◽

pp. 63-80

Author(s):

Ivo Maes

Keyword(s):

European Commission ◽

Analytical Framework ◽

Policy Coordination ◽

Economic Thought ◽

Monetary Integration ◽

Structural Elements ◽

Anglo Saxon ◽

Medium Term ◽

Monetary Cooperation ◽

Stabilisation Policies

To understand macroeconomic and monetary thought at the European Commission, two elements are crucial: firstly, the Rome Treaty, as it determined the mandate of the Commission and, secondly, the economic ideas in the different countries of the European Community, as economic thought at the Commission was to a large extent a synthesis and compromise of the main schools of thought in the Community. Initially, economic thought at the Commission was mainly a fusion of French and German ideas, with a certain predominance of French ideas. Later, Anglo-Saxon ideas would gain ground. At the beginning of the 1980s, the Commission's analytical framework became basically medium-term oriented, with an important role for supply-side and structural elements and a more cautious approach towards discretionary stabilisation policies. This facilitated the process of European integration, in the monetary area too, as consensus on stabilityoriented policies was a crucial condition for EMU. Over the years, the Commission has taken its role as guardian of the Treaties and initiator of Community policies very seriously, not least in the monetary area. It has always advocated a strengthening of economic policy coordination and monetary cooperation. In this paper, we first focus on the different schools which have been shaping economic thought at the Commission. This is followed by an analysis of the Rome Treaty, especially the monetary dimension. Thereafter, we go into the EMU process and the initiatives of the Commission to further European monetary integration. We will consider three broad periods: the early decades, the 1970s, and the Maastricht process.

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