Suchergebnisse

Using a microfounded general equilibrium model, this paper shows that when large monopolistic firms or unions perceive even a small influence on aggregate nominal variables, price targeting results in a higher equilibrium output than monetary accommodation. This is because price targeting increases, whereas monetary accommodation decreases, (i) the price elasticity of demand, (ii) the labour elasticity of demand and (iii) the elasticity of the wage with respect to the household's total income. Within this framework, we also show that (a) price targeting combined with wage centralization raise welfare, (b) the standard approximation that no single price or wage setter can affect nominal aggregates is appropriate only when (a) at least a few hundreds of such large firms exist and (b) wage centralization is low. [Copyright 2008 Elsevier B.V.]

The starting point of this project is the question of whether the macroeconomics of the German political establishment does indeed differ, as it often seems to do, from standard textbook macroeconomics: in particular, the former appears to neglect demand management (although it may be quite interventionist in other ways), to reject debt relief and to emphasise structural reform designed to improve competitiveness as the (only) key to economic growth. How far is this true? How much of whatever difference exists is due to a well worked out set of ideas in the form of Ordoliberalism? How does it relate to Germany's own experiences in different periods? How far is this the result of political preferences and how much do the idiosyncrasies of these German views matter, for the development of the Eurozone and indeed the health of the German economy?