Macroeconomic Volatilities and the Labor Market: First Results from the Euro Experiment

Journal article


Publication Details

Author(s): Merkl C, Schmitz T
Journal: European Journal of Political Economy
Publisher: Elsevier
Publication year: 2011
Volume: 27
Journal issue: 1
Pages range: 44-60
ISSN: 0176-2680
Language: English


Abstract


We analyze the effects of labor market institutions (LMIs) on inflation and output volatility. The eurozone offers an unprecedented experiment for this exercise: since 1999, no national monetary policies have been implemented that could account for volatility differences. We use a New Keynesian model with unemployment to predict the effects of LMIs. In our empirical estimations, we find that higher labor turnover costs have a significant negative effect on output volatility, while replacement rates have a positive effect, both in line with theory. While LMIs have a large effect on output volatility, they do not matter much for inflation volatility.



FAU Authors / FAU Editors

Merkl, Christian Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Makroökonomik


How to cite

APA:
Merkl, C., & Schmitz, T. (2011). Macroeconomic Volatilities and the Labor Market: First Results from the Euro Experiment. European Journal of Political Economy, 27(1), 44-60. https://dx.doi.org/10.1016/j.ejpoleco.2010.05.002

MLA:
Merkl, Christian, and Tom Schmitz. "Macroeconomic Volatilities and the Labor Market: First Results from the Euro Experiment." European Journal of Political Economy 27.1 (2011): 44-60.

BibTeX: 

Last updated on 2018-19-04 at 02:44