Journal article


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


Publication Details
Author(s): Merkl C, Schmitz T
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.



Focus Area of Individual Faculties


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.

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