Inflation and unemployment in OECD countries: the role of political ideologies, central bank independence and industrial relations
Faculty of Applied Economics
Antwerp , 2003
Research paper / UA, Faculty of Applied Economics UFSIA-RUCA ; 2003:1
University of Antwerp
This paper considers the effects of central bank independence, labor market institutions and the political partisanship on economic performance. In particular, we test if the partisanship of the government and the degree of central bank independence affect the relationship between labor market institutions and economic performance. We find evidence of interaction effects between the governments partisanship and the labor market institutions. An increase in union density favors a left-wing government, while an increase in coordination favors a right-wing government. We also find that changes in the partisanship of the government have a larger impact on inflation and unemployment when the labor market is more institutionalized.