This article compares the effects of increasing traditional welfare to introducing in-work benefits in the 15 (pre-enlargement) countries of the European Union. We use a labour supply model encompassing responses to taxes and transfers along both the intensive and extensive margins, and the...

Systematic monetary policy is analysed in a two-period extension of standard, static New Keynesian models. It is shown that countercyclical policies increase the band of inaction of the price setters, and that this feedback effect on price rigidity may make such policies "self-justifying"; that...