Wage Indexation, Employment and Inflation

Price versus productivity-indexing is considered in a model of monetary policy with incomplete information and wage bargaining. In a perfectly price-indexed economy, the inflationary bias due to lack of credibility is eliminated. However, productivity-indexing is more appropriate to dampen macroeconomic fluctuations that are caused by real disturbances. We show that productivity-indexing alone guarantees both price and employment stability, provided the government's reputation is good enough and the union's bargaining power is not too strong. This reduces the degree of price indexation as the union becomes weaker and the government's reputation improves. Productivity-indexing is desirable with volatile productivity processes and weak unions.
JEL classification : E 24; E 52     

Marginal Tax Rate Uncertainty and Wage Indexation

Frequent changes in American tax laws over the last 30 years have led to uncertainty regarding the marginal tax rate on labour income. Using a multisector framework, this paper considers the implications of the tax rate uncertainty for wage flexibility. The Fiscal Authority sets the marginal wage tax rate, and is assumed to be the leader in a Stackelberg game. Wage setters in this game determine the degree of optimal indexation and are assumed to be followers. Increases in tax rate uncertainty lead to greater nominal wage flexibility, and a decrease in optimal progressivity. Additionally, indexation to nominal shocks is complete even if the product market is monopolistically competitive.     

Monetary Policy Delegation and Optimal Wage Indexation

This note shows that delegation of policy to a central banker who puts more weight on inflation stabilization than does the rest of society could reduce the alleged social inefficiency of private wage indexation decisions that arises in models of discretionary monetary policy.     

Nominal Wage Flexibility and Economic Performance: Evidence and Implications Across Industrial Countries

By considering the theoretical connection between labour and product markets, the paper evaluates the economic relationship of these markets within the contractual wage rigidity New Keynesian explanation of business cycles. The empirical analysis focuses on the short‐run cyclical behaviour of real output, prices and wages for 19 industrial countries. Time‐series and cross‐sectional regressions are estimated. Cross‐sectional cyclical correlations in the labour and goods markets are also evaluated across countries. Consistent with the theoretical predictions, aggregate uncertainty is an important factor in increasing the flexibility of the nominal wage in response to aggregate demand shocks. Wage flexibility accelerates price inflation and moderates the response of real output growth to aggregate demand shocks. Wage flexibility does not appear to be an important factor in differentiating the real and inflationary effects of energy price shocks across countries. Finally, aggregate uncertainty increases the responsiveness of output and price to productivity shocks.     

Implications of Endogenous Group Formation for Efficient Risk-Sharing

The existing literature on sub-game perfect risk-sharing suffers from a basic inconsistency. While a group of size n is able to coordinate on a risk-sharing outcome, it is assumed that deviating subgroups cannot. I relax this assumption and characterise the optimal contract among all coalition-proof history-dependent contracts. This alters the predictions of the standard dynamic limited commitment model. I show that the consumption of constrained agents depends on both the history of shocks and its interaction with the current income of other constrained agents. From this, I derive a formal test for the presence of endogenous group formation under limited commitment.     

Wage Determination and Economic Policy

This article is a revised version of the Giblln Memorial Lecture presented on 1 September 1977 by Dr. J. E. Isaac, Deputy President of the Conciliation and Arbitration Commission. It is published by permission of the Australian and New Zealand Association for the Advancement of Science and the text of the lecture is to appear in Search , Volume 8, No 11/12.     

多层次直销薪酬制度及其经济学分析

笔者从经济学的视角阐释了多层次直销制度,通过理论和模型分析,揭示了直销的本质:直销薪酬制度的激励效应只会促使直销人员专注于推荐新人,同时直销人员在直销过程中承担了直销公司转嫁的高风险与高成本.     

Flexible and Committed Profit Sharing with Wage Bargaining: Implications for Equilibrium Unemployment

We analyze the relationship between profit sharing, employee effort, wage formation and unemployment under different relative timings of the wage and profit sharing decisions. The optimal profit share under commitment exceeds that under flexibility, because through a profit share commitment the firm can induce wage moderation. The negotiated profit sharing depends positively on the bargaining power of trade union and it has both effort-enhancing and wage-moderating effects. Higher profit sharing is shown to reduce equilibrium unemployment under ``sufficiently rigid' labor market institutions, but it can harm employment when labor market ``rigidities' are ``small enough'.     

利他偏好的内生模型及其经济学解释

利他行为对自利人性假设的挑战,要求经济学必须把偏好进行内生化处理。笔者首先构建了一个利他偏好内生模型,使得人类行为统一于效用最大化模式并具有了内在一致的规律性和可预测性;然后对利他偏好内生模型的合理性进行了解释。笔者认为,与利己行为不同,行为主体不是从利他行为后果而是从利他行为本身获得效用;通过整体间的生存适应性补偿机制,利他者不仅可以战胜利己者得以存在和持续,而且利他惩罚行为还为人类走出囚徒困境提供了有力的保证。     

Risk Preferences and Environmental Uncertainty: Implications for Crop Diversification Decisions in Ethiopia

To the extent that diversifying income portfolio is used as a strategy for shielding against production risk, both individual risk aversion and weather uncertainty could affect crop diversification decisions. This paper is concerned with empirically assessing the effects of risk aversion and rainfall variability on farm level diversity. Unique panel data from Ethiopia consisting of experimentally generated risk aversion measures combined with rainfall data are employed in the analysis. The major contribution of this study is its explicit treatment of individual risk preferences in the decision to diversify, simultaneously controlling for environmental risk in the form of rainfall variability. Covariate shocks from rainfall variability are found to positively contribute to an increased level of diversity with individual risk aversion having a positive but less significant role. We find that rainfall variability in spring has a greater effect than rainfall variability summer??the major rainy season. This finding is in line with similar agronomic-meteorological studies. These results imply that in situ biodiversity conservation could be effective in areas with high rainfall variability. However, reduction in risk aversion, which is associated with poverty reduction, is likely to reduce in situ conservation.     

税收、财政支出与内生经济增长

构建了基于财政支出、税收的内生经济增长模型,并推导出在给定税收、财政支出政策的变化路径时,经济会达到竞争性分散均衡,税率与经济增长存在倒-U型关系,政府投资性支出与经济增长之间正相关。利用中国省际面板数据进行实证检验显示,在我国经济运行中,总产出、消费、投资、政府投资性支出、税率、利息率、工资水平之间存在长期均衡关系。我国宏观税率为28.63%时达到最优值,政府投资性支出对经济增长率存在正向影响,但不同区域间存在较大差异性。     

Endogenous strength of intellectual property rights: Implications for economic development and growth

The key institution that determines sustained growth in R&D-based growth models is the strength of intellectual property rights, which are usually assumed to be exogenous. In this paper we endogenize the strength of the intellectual property rights and show how private incentives to protect these rights affect economic development and growth. Our model explains endogenous differences in intellectual property rights across countries as private incentives to invest in property rights generate multiple equilibria. We show that the resulting institutional threshold offers an explanation for why the effect of a transfer of institutions from one country to another depends on the quality of the institutions that were imported.     

人本资本形成与内生经济增长

在生产力与生产关系之间关系上分析了技术进步与制度创新的匹配关系。在知识经济时代资本泛化趋势下,以技术要素、制度要素为核心黏合其他要素形成具有多元产权主体的人力资本、治理资本在经济组织内有机整合为人本资本。以制度要素为核心的治理资本边际收益递减假设、技术要素为核心的人力资本边际收益递增假设、制度创新和技术进步匹配假设的基础上导出人本资本形成与其内生经济增长关系,并分析了我国某些国有企业存在的一些弊端。     

International Economic Interdependence and Exchange‐rate Adjustment under Persistent Stagnation

Using a two‐country, two‐commodity dynamic optimization model with general homothetic preference for the commodities, this paper examines the effects of a tariff and a quota on consumption and employment in the case where persistent unemployment arises due to a liquidity trap. A trade restriction improves the current account, which causes the home currency to appreciate and harms the competitiveness of home firms. Therefore, home employment and consumption decrease while foreign employment and consumption increase. Tariff‐quota equivalence is found to be valid. Preference, technological and policy parameter changes that improve the current account in general worsen home unemployment.     

经济增长模型中的储蓄率内生化问题

本文讨论经济增长模型中储蓄率内生化的各种问题,包括有限寿命与无限寿命、确定寿命与不确定寿命、不确定寿命下的消费决策方法、不确定寿命下非预料死亡者的遗产如何处理、个人生命如何分期、个人如何预期未来收入等。强调了寿命假定与人口年龄结构的内在联系,提出了寿命不确定下个人消费决策的新方法,探讨了有关未来收入的趋势预期和水平预期,并分析了哪一种更接近实际。     

Towards a Disequilibrium Theory of Endogenous Economic Growth

This paper discusses the need for a new approach to economic growth theory. The standard theory of growth-in-equilibrium driven by exogenous, uncaused, productivity gains has an implication that is both unjustified and perverse from a policy perspective: that government intervention of any kind can only introduce constraints and reduce option space, thus decreasing potential growth. It is argued that growth theory should (1) acknowledge the importance of natural resources, especially fossil fuels, as a driver of past and present economic growth, (2) incorporate an explicit recognition that growth is a consequence of technological innovation, especially radical innovation, that often responds to natural resource scarcities or other societal needs and (3) explicitly reflect the fact that the important (i.e. scarce) factors of production in economics can and do change over time, i.e. from a rural ‘cowboy’ economy of the past to an urbanized ‘spaceship’ economy of the future. In short, it should reflect the fact that ‘necessity is the mother of invention’. The first and third of these modifications have been proposed before, but not in combination. The third seems to be new.     

我国工资水平和经济增长的相关性研究

工资水平与经济增长相互协调,互为促进,共同提高。而我国的工资水平与经济增长关系的不规范,影响了经济的持续增长,因此,政府必须采取积极的工资政策,完善劳动力市场,提高人力资本积累水平,提高工资增长率,促进我国工资水平与经济增长的协调发展。     

Assessing Sino-Indian Economic Relations in an Interdependence Framework: 1992-2008

This study situates Sino-Indian economic interaction under the interdependence framework.By mapping conflict behavior in this dyad against the trends in the economic interdependence,we find a discernible shift away from escalation(high-level conflict)towards bargaining(diplomatic contestation).This paper argues that interdependence has only recently emerged in the India-China dyad and that lingering strategic distrust,national security consideration,and protectionist tendency have prevented the deepening of economic interdependence.The findings challenge the direction of interdependence in this dyad normally gleaned from nominal trade data.This paper also highlights key issue-areas that inhibit strategic coupling in the bilateral economic interaction.