By Robert Michulec
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Extra resources for 4.Panzer Division on the Eastern Front (1). 1941-1943 (Concord 7025)
Firms are assumed to set prices given output and the capital stock, and – crucially to this paper – the labour market is imperfectly competitive. Firms bargain with workers over wages, but are able to choose the level of unemployment. Countries with high real wages therefore get high unemployment relative to the natural rate. Inflation is a monetary phenomenon in the long run. All the models have vertical long run Phillips curves, so expansionary demand policies put upward pressure on inflation.
2004 11:33 Stránka 47 47 SUERF – Société Universitaire Européenne de Recherches Financières SUERF is incorporated in France as a non-profit-making Association. It was founded in 1963 as a European-wide forum with the aim of bringing together professionals from both the practitioner and academic sides of finance who have an interest in the working of financial markets, institutions and systems, and the conduct of monetary and regulatory policy. SUERF is a network association of central bankers, bankers and other practitioners in the financial sector, and academics with the purpose of analysing and understanding European financial markets, institutions and systems, and the conduct of regulation and monetary policy.
In particular, Germany is now better off in the short run than she is worse off in the long run. Again we have a short run vs. long run conflict – but this time larger short run benefits vs. smaller long run costs. That shows the incentive effect of wanting a more flexible partner. Evidently, fiscal restrictions without expenditure cuts throw more of the burden of adjustment onto the more flexible partner – the UK in this case. 2004 11:33 Stránka 37 Is there a link between fiscal constraints and structural reform?