Wage rigidity and capital mobility in an optimizing model of a small open economy

Summary This paper formulates an optimizing model of a small open economy with a representative (immortal) household, a firm and a government. The asset menu consists of domestic currency, non-traded bonds and traded bonds. There is a risk premium on traded bonds, which leads to deviations from perfect capital mobility and uncovered interest parity. Taxes are lump-sum, so that finance by bonds and by taxation are equivalent. The model allows for current-account and wealth dynamics. The model assumes either purchasing power parity or imperfect substitution between home and foreign goods and either labour market equilibrium, nominal wage rigidity or real wage rigidity. The steady-state effects of a fiscal contraction, a monetary disinflation and an increase in the world interest rate are discussed. The transient effects of these policies are analysed with the aid of a multiple shooting algorithm.We thank Gerard Staarink for implementing the multiple shooting algorithm used in section 4 and we thank Professors M. Fase and J. Pen for their constructive comments on a previous version of this paper. The paper is a shortened version of discussion paper No. 168 of the Centre for Economic Policy Research, London.     

Supplier satisfaction and commitment: The role of influence strategies and supplier development

Although considerable research is dedicated to influence strategies and supplier development, a lack of empirical support exists of their effects on supplier satisfaction and commitment. This exploratory study aims to fill this gap by investigating first-tier suppliers in the German automotive industry. Supplier reactions to three different influence strategies and two types of supplier development efforts are examined. Results indicate that supplier commitment is affected by the use of promises and both human- and capital-specific supplier development, while supplier satisfaction is affected by indirect, other direct influence strategies and capital-specific supplier development.