The disadvantage of tying their hands: on the political economy of policy commitments
Article Abstract:
Incumbent governments may disregard economic policies which would enhance the image of their opponents to the voters to increase their chances of being re-elected. This is demonstrated by examining the choice between fixed exchange rates and floating exchange rates. A government averse to inflation may avoid fixed exchange rates to emphasize the inflationary policies of its political opponent. This is in contrast to tying the hands of its opponent should the opponent win.
Publication Name: Economic Journal
Subject: Economics
ISSN: 0013-0133
Year: 1995
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Empirical inference with equilibrium search models of the labour market
Article Abstract:
A study was conducted to evaluate the effectiveness of using equilibrium search models in the empirical analysis of labor markets. Results indicate that equilibrium models' sensitivity to the presence of informational frictions or search frictions in the labor market makes them better estimators of wages and durations compared to other empirical approaches. In addition, the explanatory powers of these models can be used in policy analysis.
Publication Name: Economic Journal
Subject: Economics
ISSN: 0013-0133
Year: 1999
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