Endogenous cycles cannot emerge in one-sector monetary overlapping generations models when there is intertemporal substitutability, even if returns to scale are increasing. In this article, we show that the conclusions are different when there are two sectors. Considering a two-sector monetary...

This paper offers a dynamic model of the labor market with collective wage bargaining in a small open economy. The long run and short run equilibria are carefully distinguished, and the dynamics of the unemployment rate is analyzed. This model is useful to study the consequences of shocks on the...

This paper studies, in a general equilibrium model with imperfect competition, the economic efficiency of union wage settings arrangements at centralized, industry, and decentralized levels. The wage agreement at industry level is Pareto inefficient and entails the highest unemployment rate. The...

A policy restricting working hours may be justified if agents care about their social status, as the race for status induces them to work too much. We show that this intuition is questionable if the commitment capacity of the government is limited: status seeking does press people to supply...