MONOPOLISTIC COMPETITION AND CONTRACT WAGE BARGAINING

Authors

  • Carlos Eduardo Gomes State University of Maringá, PR - Brazil.
  • Maria Helena Ambrosio Dias State University of Maringá, PR - Brazil.

DOI:

https://doi.org/10.31501/ealr.v10i1.9029

Abstract

This model proposes a framework in which there is rigidity in the goods market from the monopolistic competition structure and in the labor market from contract wage setting. In addition, the labor market rigidity follows Blanchard (1991) and McDermott (1998). The main objective here is accounting for both sources of shock, supply and demand sides. In the short run, one implication is that if there is equilibrium with symmetry, a positive monetary shock would increase employment and cause an income transference from profits to wages. In the long run, a positive demand shock coming from the increase in real money balances would increase aggregate consumption. Moreover, a positive supply shock on real wages increases the demand for real money balances.

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Author Biographies

Carlos Eduardo Gomes, State University of Maringá, PR - Brazil.

Postdoctoral degree in the Graduate Program in Economics by the State University of Maringá. E-mail: cegomes1990@gmail.com

Maria Helena Ambrosio Dias, State University of Maringá, PR - Brazil.

Full Professor at the State University of Maringá, PR - Brazil. This paper is the result of a Research Fellowship of the Brazilian National Council of Research (CNPq).

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Published

2019-11-21

Issue

Vol. 10 No. 1 (2019): Economic Analysis of Law Review

Section

Papers

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