This paper presents a simple ratchet model. The ratchet effect, and the inability of the government to precommit credibly to given incentive schemes, are related to the fact that the government has monopsony power over managers, as is the case under market socialism where means of production are...

A smooth progression from Stage Two to Stage Three of EMU requires that the type of policy planned for Stage Three should be foreshadowed in Stage Two. Two possibilities for that policy are monetary targeting or an interest rate policy feeding back on a nominal variable. The paper re-examines...

While ageing is accepted as a major problem for most industrialized societies, its labour market consequences are not yet fully understood. This paper analyses the effects of changes in the age composition of the Federal Republic of Germany on the incidence of unemployment in different sex-age...

The changes in economic policy introduced in the UK after 1979 had a substantial impact on income distribution, unemployment and productivity growth. This paper brings together available evidence in an attempt to evaluate the welfare effects of the Thatcher reforms. The estimated impact turns...

In the context of an overlapping generations model, we show that liquidity constraints on households: (i) raise the saving rate; (ii) strengthen the effect of growth on saving; and (iii) increase the growth rate if productivity growth is endogenous. These propositions are supported by...

Money demand instability has been the subject of considerable attention in the recent literature. This paper examines the stability of velocity series for the United States and for five European countries (France, Germany, Italy, the Netherlands and the United Kingdom). A distribution-free test...

This paper develops a matching model of the labour market under wage rigidity when hiring decisions are irreversible. There are two types of workers, the skilled and the unskilled. The model is used to analyse whether technological advances may have increased unemployment, and shows that this is...

As Stage Two of European Monetary Union (EMU) in Europe develops, a major issue is the coordination of monetary policies. Member countries of the European Monetary System (EMS) will have to align their domestic source moneys. This paper argues that for this purpose, the Treasury and central bank...

Economic and monetary reunification in Germany has proved to be more expensive than previously thought - and not just for the Germans. If a `Mezzogiorno' problem of continuing fiscal transfers to the East and possible migration flows westwards are to be avoided, there must be convergence in...

The purpose of this paper is to test for evidence of opportunistic `political business cycles' in a large sample of 18 OECD economies. Our results can be summarized as follows. First, we find very little evidence of pre-electoral effects of economic outcomes, in particular, on GDP growth and...