How do different institutional arrangements for the central bank perform when central bankers have private objectives and society's objectives vary with time? This paper evaluates three benchmark monetary institutions from a constitutional perspective: (i) a contract with an inflation- or...

We examine the transitional dynamics of Lucas' supply side model of the US economy in order to specify the effects of capital taxation on economic growth and welfare. We restrict the analysis to policy plans characterized by constant capital taxes and require the government to maintain a...

This paper explores how European Monetary Union will change the wage setting behavior of national labor unions. The authors derive the impact of national inflation aversion and labor militancy on the performance of national labor markets under different monetary arrangements. A common central...

Why do many democracies fail to reform their labor-market institutions? To answer this question we study the feasibility of reforms that include compensation to insiders for the removal of labor-market regulations. Under asymmetric information, a reformer who wants to buy the approval of voters...