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| Author: | Guzzo, V. Velasco, A. |
| Title: | The case for a populist Central Banker |
| Journal: | European Economic Review
1999 : JUN, VOL. 43:7, p. 1317-1344 |
| Index terms: | CENTRAL BANKS CENTRALISATION PAY INFLATION UNEMPLOYMENT MODELS |
| Language: | eng |
| Abstract: | A general equilibrium optimizing model is presented in which there are studied the joint effects of centralization of wage setting and central bank conservatism on economic performance. Several striking conclusions emerge. In relatively centralized labour markets employment and output are decreasing,and inflation is initially increasing and then decreasing, in the degree of central bank conservatism. A radical-populist central banker who cares not at all about inflation, maximizes social welfare. Economic performance is not U-shaped in the degree of centralization of the labour market, in contrast to conventional wisdom. |
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