Market reforms at the zero lower bound
"This paper studies the impact of product and labor market reforms when the economy faces major slack and a binding constraint on monetary policy easing. such as the zero lower bound. To this end, we build a two-country model with endogenous producer entry, labor market frictions, and nominal r...
| Main Authors: | , , , |
|---|---|
| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Washington, DC
2017
IMF |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19396537124911147199-Market-reforms-at-the-zero-low.htm |
| _version_ | 1771659898667401218 |
|---|---|
| author | Cacciatore, Matteo Duval, Romain Fiori, Giuseppe Ghironi, Fabio |
| author_facet | Cacciatore, Matteo Duval, Romain Fiori, Giuseppe Ghironi, Fabio |
| collection | Library items |
| description | "This paper studies the impact of product and labor market reforms when the economy faces major slack and a binding constraint on monetary policy easing. such as the zero lower bound. To this end, we build a two-country model with endogenous producer entry, labor market frictions, and nominal rigidities. We find that while the effect of market reforms depends on the cyclical conditions under which they are implemented, the zero lower bound itself does not appear to matter. In fact, when carried out in a recession, the impact of reforms is typically stronger when the zero lower bound is binding. The reason is that reforms are inflationary in our structural model (or they have no noticeable deflationary effects). Thus, contrary to the implications of reduced-form modeling of product and labor market reforms as exogenous reductions in price and wage markups, our analysis shows that there is no simple across-the-board relationship between market reforms and the behavior of real marginal costs. This significantly alters the consequences of the zero (or any effective) lower bound on policy rates." |
| format | TEXT |
| geographic | international |
| id | 19396537124911147199_f725756540d14855952b2ad4abfd7b44 |
| institution | ETUI-European Trade Union Institute |
| is_hierarchy_id | 19396537124911147199_f725756540d14855952b2ad4abfd7b44 |
| is_hierarchy_title | Market reforms at the zero lower bound |
| language | English |
| physical | 47 p. Digital |
| publishDate | 2017 |
| publisher | Washington, DC IMF |
| spellingShingle | Cacciatore, Matteo Duval, Romain Fiori, Giuseppe Ghironi, Fabio employment security monetary policy labour market reform structural change Market reforms at the zero lower bound |
| thumbnail | https://www.labourline.org/Image_prev.jpg?Archive=131592495977 |
| title | Market reforms at the zero lower bound |
| topic | employment security monetary policy labour market reform structural change |
| url | https://www.labourline.org/KENTIKA-19396537124911147199-Market-reforms-at-the-zero-low.htm |