Efficient Wage-Employment Bargaining, Perfect Capital Mobility and the Policy Assignment Principle
Following Chang, Lai, and Chang(1999), this report discusses the policy assignment problem with efficient wage-employment bargaining under perfect capital mobility. Whether it can rescue the default of proposed by Ramirez (1988) that coordinate between fiscal and exchange rate policies to achieve given desirable targets. The conclusion of this report is as follows¡G
Under fixed exchange rates with perfect capital mobility, however, an appropriate mixture between monetary and fiscal policies can dynamically adjust to attain simultaneously the internal goal of desired output and the external goal of official foreign reserves. It's conclusion as the same as proposed by Lai, Chang, and Chu (1990). But more importantly, it can rescue the default of proposed by Ramirez (1988) that coordinate between fiscal and exchange rate policies to achieve given the internal and external goals. Accordingly, we can understand that efficient wage-employment bargaining in the labor market plays a curial role in assessing the assignment or policy instrument to targets.
Furthmore, this report extends the analysis results under fixed exchange rates shifting to the system of a managed floating regime. It can find that the policy assignment can still achieve given desirable target. Consequently, this report provides further evidence that the efficient wage-employment bargaining is very important for assignment problem.
Advisor:Wen-ya Chang; none; none
School:National Sun Yat-Sen University
School Location:China - Taiwan
Source Type:Master's Thesis
Keywords:efficient wage employment bargaining policy assignment principle perfect capital mobility
Date of Publication:02/07/2004