Scandinavian Working Papers in Economics

Seminar Papers,
Stockholm University, Institute for International Economic Studies

No 708: The Interaction Between Labor Market Policy and Monetary Policy: An Analysis of Time Inconsistency Problems

Åsa Johansson ()
Additional contact information
Åsa Johansson: Institute for International Economic Studies, Stockholm University, Postal: Stockholm University, S-106 69 Stockholm, Sweden

Abstract: This paper studies the interaction between time inconsistency problems in labor market policy and monetary policy. When both policies are discretionary, there is a positive inflation bias, whereas the bias in labor market programs may be either positive or negative. A commitment of labor market programs to zero increases inflation, as compared to the case when both labor market policy and monetary policy are discretionary. Delegation of labor market policy to a liberal labor market board may improve the discretionary outcome, even if labor market programs crowd out regular employment. A conservative central bank always reduces the social loss, even when monetary policy interacts with labor market policy.

Keywords: TBA

JEL-codes: J00

40 pages, May 16, 2002

Full text files

FULLTEXT01  

Download statistics

Questions (including download problems) about the papers in this series should be directed to Hanna Christiansson ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-01-23 23:33:58.