Stabilisation, policy targets and unemployment in imperfectly competitive economies

Article Abstract:

The hypothesis that rate of equilibrium unemployment is dependent on the objectives of the central bank was tested. By means of a model where the central bank uses monetary policy to stabilize the economy, it was shown that inflation and unemployment would be lower with an inflation target compared to targets for output, money or nominal gross domestic product. Greater elasticities of demand result when there is an inflation target. This in turn causes lower mark-up of price over marginal cost results and makes wages more sensitive to unemployment.

Research, Competition (Economics), Economic aspects, Unemployment, Economic stabilization

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The politics of persuasion when voters are rational

Article Abstract:

A paradigm of a democratic society was developed to determine the amount influence political parties exert on voters. The paradigm featured two parties espousing divergent economic policies and voters who have ample knowledge of how the economy works. The analysis showed that political parties tend to misinform voters about the state of the economy and the effectiveness of their policies. Moreover, it was revealed that rational voters are less likely to trust either party when political polarization is strong.

Analysis, Economic policy, Political aspects, Political parties, Influence (Psychology)

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