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Central bank conservatism and labor market regulation
Department of Economics, Uppsala University, Uppsala, Sweden; The Ratio Institute, Stockholm, Sweden.ORCID iD: 0000-0001-8857-6116
Sveriges Riksbank, Stockholm, Sweden.
2005 (English)In: European Journal of Political Economy, ISSN 0176-2680, E-ISSN 1873-5703, Vol. 21, no 2, p. 345-363Article in journal (Refereed) Published
Abstract [en]

How does central bank conservatism affect labor market regulation? 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 cost of regulation. It also increases unemployment variability, making regulation more costly. In combination, the two effects produce a hump-shaped relation between conservatism and labor market regulation. To test this prediction, we use data for 19 OECD countries for the period 1980–1994. Our proxies for regulation are unemployment, different labor market institutions, and indices of labor market regulation. Conservatism is proxied by two common measures of central bank independence. We find support for the prediction of a hump-shaped relation between conservatism and labor market regulation.

Place, publisher, year, edition, pages
Elsevier, 2005. Vol. 21, no 2, p. 345-363
Keywords [en]
Central bank independence, Labor market regulation, Credibility, Flexibility, Inflation, Unemployment
National Category
Economics
Identifiers
URN: urn:nbn:se:oru:diva-72660DOI: 10.1016/j.ejpoleco.2004.04.002Scopus ID: 2-s2.0-17844391556OAI: oai:DiVA.org:oru-72660DiVA, id: diva2:1290883
Available from: 2019-02-21 Created: 2019-02-21 Last updated: 2019-02-22Bibliographically approved

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Jordahl, Henrik

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CiteExportLink to record
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Citation style
  • apa
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More styles
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  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf