Discussion paper

DP3646 Macroeconomic Fluctuations and the Timing of Labour Market Reforms

In this Paper, I analyse the pros and cons of implementing structural reforms of the labour market in booms versus recessions, in light of considerations of social efficiency, political viability, and macroeconomic fine-tuning. While the optimal timing of a reform depends on the relative importance of several conflicting effects, it seems clear that a reform should be accompanied by an expansionary macroeconomic policy. This makes structural reform more problematic in the context of the European Monetary Union.

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Citation

Saint-Paul, G (2002), ‘DP3646 Macroeconomic Fluctuations and the Timing of Labour Market Reforms‘, CEPR Discussion Paper No. 3646. CEPR Press, Paris & London. https://cepr.org/publications/dp3646