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It is shown in a game theoretic framework that it may pay off to signal a “conservative” policy stance--giving a high priority to price stability--by appreciating the exchange rate. Such an appreciation demonstrates to domestic producers and more precisely to the trade union that the new policy stance is meant to be serious. An example explores the welfare implication for the policy maker and the trade union. The empirical background of the paper refers to the monetary policy in Europe. It explains the occurrence of exchange rate commitments to the deutsche mark, with appreciated rates.

Banks and Banking --- Foreign Exchange --- Labor --- Labor-Management Relations, Trade Unions, and Collective Bargaining: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Wages, Compensation, and Labor Costs: General --- Currency --- Foreign exchange --- Trade unions --- Banking --- Labour --- income economics --- Exchange rates --- Labor unions --- Real exchange rates --- Wage adjustments --- Wages --- Banks and banking --- United Kingdom

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Welfare states can be reformed successfully, and popular support for reforms can be maintained. But this requires an internally consistent package of labor market, fiscal, and product market reforms, including some kind of buy-in, through, for example, tax cuts. Empirical analysis combined with a select number of case studies-comprising Ireland, Denmark, the Netherlands, and the United Kingdom-reveals that successful reformers focused on increasing labor supply through benefit reform, lowering tax wedges, and lowering government consumption. At the same time, greater labor supply translated into employment growth more effectively in the presence of liberal labor and product markets.

Labor supply. --- Labor force --- Labor force participation --- Labor pool --- Work force --- Workforce --- Labor market --- Human capital --- Labor mobility --- Manpower --- Manpower policy --- Labor --- Taxation --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Wages, Compensation, and Labor Costs: General --- Labor-Management Relations, Trade Unions, and Collective Bargaining: General --- Demand and Supply of Labor: General --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Labour --- income economics --- Welfare & benefit systems --- Labor taxes --- Labor supply --- Labor markets --- Taxes --- Income tax --- Economic theory --- United Kingdom

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Inflation forecasts are modelled as monotonically diverging from an estimated long-run anchor point, or “implicit anchor”, towards actual inflation as the forecast horizon shortens. Fitting the model with forecasts by analysts, businesses and trade unions for South Africa, we find that inflation expectations have become increasingly strongly anchored. That is, the degree to which the estimated implicit anchor pins down inflation expectations at longer horizons has generally increased. Estimated inflation anchors of analysts lie within the 3–6 percent inflation target range of the central bank. However, the implicit anchors of businesses and trade unions, who are directly involved in the setting of wages and prices that drive the inflation process, have remained above the top end of the official target range. Possible explanations for these phenomena are discussed.

Monetary policy --- Inflation (Finance) --- Finance --- Natural rate of unemployment --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Inflation --- Labor --- Money and Monetary Policy --- Forecasting --- Price Level --- Deflation --- Central Banks and Their Policies --- Labor-Management Relations, Trade Unions, and Collective Bargaining: General --- Monetary Policy --- Forecasting and Other Model Applications --- Wages, Compensation, and Labor Costs: Public Policy --- Macroeconomics --- Trade unions --- Monetary economics --- Economic Forecasting --- Labour --- income economics --- Labor unions --- Inflation targeting --- Economic forecasting --- Wage setting --- Prices --- Wages --- South Africa

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This paper explores and quantifies several aspects of the performance of currency unions using an augmented version of the gravity model and focusing on two samples, the world and Africa. Our empirical findings suggest that, in principle, membership in a currency union should benefit Africa as much as it does the rest of the world. In addition, we find evidence from both samples that the effect of currency unions on trade is large, almost a doubling; currency unions are associated with trade creation, increase price co-movements among members, and make trade more stable; and longer duration of currency union membership brings about more benefits, although with some diminishing returns.

Commerce -- Econometric models. --- Electronic books. -- local. --- Monetary unions -- Africa -- Econometric models. --- Monetary unions -- Econometric models. --- Finance --- Business & Economics --- International Finance --- Commerce --- Monetary unions --- Econometric models. --- Trade --- Common currencies --- Currency areas --- Currency unions --- Optimum currency areas --- Economics --- Business --- Transportation --- Currency question --- Money --- Traffic (Commerce) --- Merchants --- Econometrics --- Exports and Imports --- Labor --- Money and Monetary Policy --- Financial Aspects of Economic Integration --- Labor-Management Relations, Trade Unions, and Collective Bargaining: General --- Trade Policy --- International Trade Organizations --- Econometric Modeling: General --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- International economics --- Trade unions --- Econometrics & economic statistics --- Monetary economics --- Labor unions --- Plurilateral trade --- Gravity models --- Currencies --- International trade --- Econometric models --- South Africa

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Even though institutions are created to protect workers, they may interfere with labor market functioning, raise unemployment, and end up being circumvented by informal contracts. This paper uses Brazilian microeconomic data to show that the institutional changes introduced by the 1988 Constitution lowered the sensitivity of real wages to changes in labor market slack and could have contributed to the ensuing higher rates of unemployment in the country. Moreover, the paper shows that states that faced higher increases in informality (i.e., illegal work contracts) following the introduction of the new Constitution tended to have smaller drops in wage responsiveness to macroeconomic conditions, thus suggesting that informality serves as a escape valve to an over-regulated environment.

Labor market --- Wages --- Employees --- Market, Labor --- Supply and demand for labor --- Markets --- Compensation --- Departmental salaries --- Earnings --- Pay --- Remuneration --- Salaries --- Wage-fund --- Wage rates --- Working class --- Income --- Labor costs --- Compensation management --- Cost and standard of living --- Prices --- Law and legislation --- Econometric models. --- Supply and demand --- Brazil --- Economic conditions. --- Labor --- Macroeconomics --- Demand and Supply of Labor: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Wages, Compensation, and Labor Costs: General --- Labor Economics: General --- Informal Economy --- Underground Econom --- Labor-Management Relations, Trade Unions, and Collective Bargaining: General --- Labour --- income economics --- Labor markets --- Unemployment rate --- Unemployment --- Labor economics