DP4043 Structural Reforms and the Macroeconomy: The Role of General Equilibrium Effects

Author(s): Hans Gersbach
Publication Date: September 2003
Keyword(s): awareness of general equilibrium effects, product market reforms, sectoral wage bargaining, unemployment, uneven technological progress
JEL(s): D58, E24, J50, L50
Programme Areas: Labour Economics, Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=4043

We examine the macroeconomic consequences of industry wage-bargaining and product market reforms. We suggest that general equilibrium effects may be important for the evaluation of industry-specific regulations. In particular, we suggest that the European unemployment problem can be traced back partially to insufficient recognition of general equilibrium effects. Moreover, unawareness of general equilibrium effects may be an explanation of why regulations are introduced and why structural reforms are (not) undertaken.