Debt-to-GDP ratios have grown to unprecedented levels in many industrialized economies. This requires disciplined consolidation efforts which are, however, supposed to come now at the wrong time with the economic recovery being fragile. Against this background, we call for a global debt brake...

We develop a growth model with unemployment due to imperfections in the labor market. In this model, wage inertia and balanced budget rules cause a complementarity between capital and employment capable of explaining the existence of multiple equilibrium paths. Hysteresis is viewed as the result...

This paper estimates the effect of minimum wage regulation in 16 OECD countries, 1970-2008. Our treatment is motivated by Neumark and Wascher's (2004) seminal cross-country study using panel methods to estimate minimum wage effects among teenagers and young adults. Apart from the longer time...

In the neoclassical production functions model technical change (TC) is assumed to be exogenous and it is specified as a function of time. However, some exogenous external factors other than time can also affect the rate of TC. In this paper we model TC via a combination of time trend (purely...

In this paper, we investigate the consequences of the rise in educational attainment on the US generational accounts. We build on the 1995 accounts of Gokhale et al. (1999) and disaggregate them per schooling level. We show that low skill newborns are characterized by a negative generational...

According to the 2001 Spanish budgetary previsions, the government deficit is about to disappear. We analyse this matter within a generational accounting framework. Accounting for the recent expansive phase of the economic cycle, we find that current fiscal policy is also intertemporally...

This paper theoretically investigates the impact of European integration on employment by developing a new-keynesian model where fiscal policy effectively reduces firms? market power. Stronger product market competition is shown to reduce the marginal ability of governments to improve employment...

The wage paid to politicians affects both the choice of citizens to run for an elective office and the performance of those who are appointed. First, if skilled individuals shy away from politics because of higher opportunities in the private sector, an increase in politicians' pay may change...

An important aspect of the impact of the economic crisis is how pay in the public sector responds - in the face not only of the evolution of pay in the private sector, but also extreme pressure on public spending (of which pay is a very large proportion) as fiscal deficits soar. What are the...

This paper assesses the relationship between government and manufacturing wages. We find that the long-run relation between the two wages is stronger when the government is a large employer. Manufacturing wages are better aligned with productivity and unemployment when public wages, to which...