This paper examines the endogeneity of several structural variables which enter unemployment rate equations—the generosity of unemployment benefits, nonwage labor costs, the relative minimum wage, and the degree of unionization. It finds evidence of reverse causality for these structural...

This paper reviews the Staff-Monitored Program (SMP) for the Union of the Comoros. The authorities’ program for 2005 is focused on macroeconomic stabilization. This is predicated on a consolidated budget entailing a domestic fiscal adjustment slightly above 3 percent of GDP. Monetary policy...

We analyze labor market models where the law of one price does not hold-that is, models with equilibrium wage dispersion. We begin by assuming workers are ex ante heterogeneous, and highlight a flaw with this approach: if search is costly, the market shuts down. We then assume workers are...

Search models with posting and match-specific heterogeneity generate wage dispersion. Given K values for the match-specific variable, it is known that there are K reservation wages that could be posted, but generically never more than two actually are posted in equilibrium. What is unknown is...

Using Chilean data, we document that for resource-rich small open economies the effects of terms of trade shocks on the wage gap (between skilled and unskilled workers) depend on factor intensities in the non-tradable sector, following the model in Galiani, Heymann, and Magud (2010). For a...

Governments often intervene in labor markets with the aim of reducing inequality and promoting employment. Such intervention often results in wage compression and restrictions on how firms use their workers. This paper investigates the impact of such interventions on the labor market conditions...

Fiscal policy has a strong foundation in the multiyear program of spending cuts, tax reforms, and deficit reduction in Germany. Germany's focus on actual, rather than cyclically adjusted, fiscal goals and outcomes carries the risk of rendering fiscal policy procyclical. The recent business and...

This paper examines the impact of macroeconomic and financial sector policy announcements in the United States, the United Kingdom, the euro area, and Japan during the recent crisis on interbank credit and liquidity risk premia. Announcements of interest rate cuts, liquidity support, liability...

The paper addresses issues that arise in designing a framework for inflation targeting, with particular attention to features of the Bank of England's approach and experience. The comparison of welfare reform in the United Kingdom with similar efforts in other countries is discussed. The paper...

This 2008 Article IV Consultation highlights that the United Kingdom’s economic growth was above trend in 2006 and 2007. In terms of expenditure, the expansion was largely driven by private consumption, on the heels of strong employment, steady real wage and living standards growth, and a...