The chapter first introduces Tarantelli’s thought on the role of labour economics and social pacts. The implementation of his proposals for a social pact in Italy is then discussed and compared to similar experiences in Europe. Attention is finally devoted to developing a theory of social...

The chapter presents a model, where the union is interested in the level of wages, employment and the level of public expenditure. Social pacts are shown not only to lead to a superior macroeconomic performance, but to be also acceptable by unions. The key to their acceptability lies in the...

The European Union is at a crossroads. This book analyzes the historical roots of the EU's monetary and financial institutions in order to better understand its struggle to maintain an economic and monetary union, as well as the ongoing problems facing the Euro. The institutions of the EU are...

Recent developments in macroeconomics resurrect the view that welfare costs of inflation arise because the latter acts as a tax on money balances. Empirical contributions show that wage re-negotiations take place while expiring contracts are still in place. Bringing these seemingly unrelated...

We address the coordination failures that arise in models with multiple equilibria and study how they may be resolved by reconsidering the role of cheap talk communication as an equilibrium selection device. We introduce an outside option (representing common-knowledge expected outcomes in the...

The paper shows that a monetary policy regime that allows for a positive inflation rate disciplines monopolistic wages setters if these, when setting contracts, internalize the consequences of their choices for economic outcomes over the life of the contract. We also show that discretionary...