MONOPOLISTIC COMPETITION AND CONTRACT WAGE BARGAINING

• Autor(a) principal: Gomes, Carlos Eduardo
• Data de Publicação: 2019
• Outros Autores: Dias, Maria Helena Ambrosio
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Economic Analysis of law Review
• Texto Completo: https://portalrevistas.ucb.br/index.php/EALR/article/view/9029
• topic: Rigidity; Monopolistic competition structure; Supply and demand sides.

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.