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