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Business and Economics > Production and Operations Management

You are looking at 1 - 3 of 3 items for :

  • Type: Journal Issue x
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Cover IMF Working Papers
Market Reforms at the Zero Lower Bound
Matteo Cacciatore
,
Mr. Romain A Duval
,
Giuseppe Fiori
, and
Mr. Fabio Ghironi
This paper studies the impact of product and labor market reforms when the economy faces major slack and a binding constraint on monetary policy easing. such as the zero lower bound. To this end, we build a two-country model with endogenous producer entry, labor market frictions, and nominal rigidities. We find that while the effect of market reforms depends on the cyclical conditions under which they are implemented, the zero lower bound itself does not appear to matter. In fact, when carried out in a recession, the impact of reforms is typically stronger when the zero lower bound is binding. The reason is that reforms are inflationary in our structural model (or they have no noticeable deflationary effects). Thus, contrary to the implications of reduced-form modeling of product and labor market reforms as exogenous reductions in price and wage markups, our analysis shows that there is no simple across-the-board relationship between market reforms and the behavior of real marginal costs. This significantly alters the consequences of the zero (or any effective) lower bound on policy rates.
Keywords:
WP; product market; Employment protection; Monetary policy; Producer entry; Product market regulation; Structural reforms; Unemployment benefits; Zero lower bound; product market deregulation; present discounted value; nominal interest rate; physical capital; product market reform; labor market dynamics; Consumption; Commodity markets; Labor productivity; Global
Cover IMF Working Papers
Employment Protection and Business Cycles in Emerging Economies
Mr. Ruy Lama
and
Carlos Urrutia
We build a small open economy, real business cycle model with labor market frictions to evaluate the role of employment protection in shaping business cycles in emerging economies. The model features matching frictions and an endogenous selection effect by which inefficient jobs are destroyed in recessions. In a quantitative version of the model calibrated to the Mexican economy we find that reducing separation costs to a level consistent with developed economies would reduce output volatility by 15 percent. We also use the model to analyze the Mexican crisis episode of 2008 and conclude that an economy with lower separation costs would have experienced a smaller drop in output and in measured total factor productivity with no significant change in aggregate employment.
Keywords:
WP; labor market; open economy; separation cost; interest rate
Cover IMF Working Papers
Labor Market Institutions and Unemployment Dynamics in Transition Economies
Mr. Pietro Garibaldi
and
Ms. Zuzana Brixiova
This paper studies interactions between labor market institutions and unemployment dynamics in transition economies. It presents a dynamic matching model in which state sector firms endogenously shed labor and private job creation takes time. Two main conclusions arises. First, higher unemployment benefits increase steady-state unemployment, and, during the transition, they reduce the fall in real wages and speed up closure of state enterprises. Second, higher minimum wages can theoretically speed up the elimination of state sector jobs without affecting steady-state unemployment. These results are broadly consistent with existing evidence on the dynamics of unemployment and real wages in transition economies.
Keywords:
WP; private sector; minimum wage; labor market; Unemployment; Transition Economies; Matching Models; state sector job; job-worker pair; replacement ratio; CEE economy; capital gain; private sector job; unemployment insurance system; reservation productivity; wage arrears; opportunity cost; private sector employment; sector job; Public sector; Minimum wages; Unemployment benefits; Productivity; Central and Eastern Europe