Money Volatility and Labour Demand Uncertainty in a Unionised Economy

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【标题】Money Volatility and Labour Demand Uncertainty in a Unionised Economy

【作者】 Giulio Piccirilli 

【摘要】We insert four basic assumptions in an otherwise standard real business cycle model: monopolistic unions; short term nominal wage contracts; stochastic money supply and endogenous growth. The resulting economy exhibits a number of interesting features. First; unions face an uncertain labour demand prospect and; due to increasing labour disutility; impose a risk premium over the usual monopolistic wage. Second; the risk premium reduces the natural level of employment and depresses the long term rate of growth so that uncertainty reveals to be harmful on both accounts. Third; thanks to the endogenous technology; even if nominal rigidities are short termed; monetary perturbations turn out to have permanent e¤ects on output and; in this respect; appear to be empirically equivalent to permanent supply side perturbations. Finally; the model predicts a positive relationship between the level of in?ation and its variability and a negative relationship between the variability of in?ation and output and the rate of growth. In this sense; we o¤er an explanation for some well known facts in empirical macroeconomics.