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Recent developments in macroeconomics resurrect the view that welfare costs of inflation arise because the latter acts as a tax on money balances. Empirical contributions show that wage re-negotiations take place while expiring contracts are still in place. Bringing these seemingly unrelated aspects together in a stylized general equilibrium model, we find a disciplining effect of a positive inflation target on the wage markup and identify a long-term trade-off between inflation and output.

The paper extensively studies the static model of non-cooperative linear quadratic games in which a set of agents chooses their instruments strategically to minimize their linear quadratic criterion. We first derive the necessary and sufficient conditions for the existence of a Nash equilibrium as well as for multiple equilibria to arise. Furthermore, we study the general condition for policy neutrality and Pareto efficiency of the equilibrium by introducing a new concept of decisiveness.

As communications systems and technology become more advanced and complex, it will be increasingly important to focus on users- individual needs. Personalization and effective user profile management will be necessary to ensure the uptake and success of new services and devices and it is therefore important to focus on the users- requirements in this area and define solutions that meet these requirements. The work on personalization and user profiles emerged from earlier ETSI work on a Universal Communications Identifier (UCI) which is a unique identifier of the user rather than a range of identifiers of the many of communication devices or services (e.g. numbers of fixed phone at home/work, mobile phones, fax and email addresses). This paper describes work on personalization including standardized information and preferences and an architectural framework providing a description of how personalization can be integrated in Next Generation Networks, together with the UCI concept., {"references":["European Telecommunications Standards Institute (ETSI), www.etsi.org","ETSI Specialist Task Force 342 on Personalization and User Profile\nManagementStandardization,\nhttp://portal.etsi.org/STFs/STF_HomePages/STF342/STF342.asp","ETSI Specialist Task Forces, http://portal.etsi.org/stfs/process/home.asp","ETSI EG 202 249: \"Universal Communications Identifier (UCI);\nGuidelines on the usability of UCI based systems\".","ETSI EG 202 067: \"Universal Communications Identifier (UCI); System\nframework\".","ETSI EG 284 004: \"Telecommunications and Internet converged\nServices and Protocols for Advanced Networking (TISPAN); Incorporating Universal Communications Identifier (UCI) support into\nthe specification of Next Generation Networks (NGN).","3GPP TS 22.240: 2005, Technical Specification 3rd Generation Partnership Project; Technical Specification Group Services and System Aspects; Service requirement for the 3GPP Generic User Profile (GUP);\nStage 1, 3GPP, Sophia-Antipolis.","3GPP TS 23.240: 2007-06, Technical Specification 3rd Generation \nPartnership Project; Technical Specification Group Services and System \nAspects; 3GPP Generic User Profile - architecture; Stage 2, 3GPP, \nSophia-Antipolis.","3GPP TS 33.220: 2007-12, Technical Specification 3rd Generation \nPartnership Project; Technical Specification Group Services and System \nAspects; Generic Authentication Architecture (GAA); Generic \nbootstrapping architecture, 3GPP, Sophia-Antipolis. \n[10] 3GPP TR.32.808: 3rd Generation Partnership Project; Technical \nSpecification Group Services and System Aspects; Telecommunication \nmanagement; Study of Common Profile Storage (CPS) Framework of \nUser Data for network services and management (Release 8) \n[11] ETSI EG 202 325: \"Human Factors (HF); User Profile Management\". \n[12] ITU-T Recommendation E.164: \"The international public \ntelecommunication numbering plan\". \n[13] RDF, Consortium Recommendation, O. Lassila, R. Swick, February \n1999, http://www.w3.org/TR/REC-rdf-syntax/ \n[14] Extensible Markup Language (XML), http://www.w3.org/XML/"]}

This paper extends the standard New Keynesian dynamic stochastic general equilibrium (DSGE) model to agents who cannot smooth consumption (i.e. spenders) and are affected by external consumption habits. Although these assumptions are not new, their joint consideration strongly affects some theoretical and empirical results addressed by the recent literature. By deriving closed-form solutions, we identify different demand regimes and show that they are characterized by specific features regarding dynamic stability and monetary policy effectiveness. We also evaluate our model by stochastic simulations obtained from the Bayesian parameters estimates for the G7 economies. From posterior impulse responses we address the empirical relevance of the different regimes and provide comparative evidence on the heterogeneity of monetary policy effects among countries.

This paper attempts to give a rationale to public announcements, so often observed in the real world, and to formalize the idea that they can be used as a form of equilibrium selection device when multiple equilibria arise. It also shows how announcements solve the problems of coordination failures as predicted by the empirical literature based on experimental studies.

By introducing the concepts of implicit coalitions and conáict of interests in a multiple-player context, this paper generalizes some theorems on policy invariance and equilibrium existence and uniqueness for LQ policy games.

The paper extensively studies the static model of non-cooperative linear quadratic games in which a set of agents strategically chooses their instruments. We first derive the necessary and sufficient conditions for the existence of a Nash equilibrium as well as for multiple equilibria to arise. Furthermore, we study the general condition for policy neutrality and Pareto efficiency of the equilibrium by introducing a new concept of decisiveness.

In New Keynesian models nominal rigidities determine socially inefficient outcomes. Our paper reverses this view: properly designed monetary policies may take advantage of predetermined nominal wages to discipline monopolistic wage setters. This, in turn, requires accepting a non-zero inflation rate. Discretionary monetary policy is effective when wage setters are non atomistic. Inflation targeting has real effects irrespective of the degree of labor market centralization.

We show that rational expectations do not affect the controllability of an economic system, either in its static or in its dynamic version, even though their introduction in many other circumstances may make it impossible for the policymaker to affect certain variables due to policy invariance, policy neutrality or time inconsistency problems. The controllability conditions stated by Tinbergen and subsequent authors continue to hold under rational expectations; and when they are satisfied rational expectations may even enhance the power to control an economy over time. This is important because it shows that an underlying equilibrium can exist even if our conventional optimisation techniques lead to policy invariance, neutrality or time inconsistency. We provide examples of our results in the context of recent monetary policy debates.

The paper studies the relationship between equilibrium existence in LQ games and the classical theory of economic policy, generalizing some recent results. In particular, by focusing on system controllability instead of the controllability by one or some of the players, we find conditions for the existence of the Nash equilibrium that extend those required by the previous literature. The usefulness of our results is described by some examples in the field of international monetary and trade agreements.

This paper outlines the evolution of the theory of economic policy from the classical contributions of Frisch, Hansen, Tinbergen and Theil to situations of strategic interaction. Andrew Hughes Hallett has taken an active and relevant part in this evolution, having contributed to both the development and recent rediscovery of the classical theory, with possible relevant applications for model building.

Following the recent developments of the literature on stabilization policies, this paper investigates the effect of tax distortions on equilibrium determinacy in a New Keynesian economy with rule-of-thumb consumers and capital accumulation. In particular, we focus on the inter-action between monetary policy and tax distortions in supporting the saddle-path equilibrium under the assumptions of balanced budget and monetary policy satisfying a Taylor rule.

Measuring migrants’ integration into host societies is a challenging task as, in general, measuring any social behavior and social phenomena. The task is affected by many specific problems related to the definition of the objective of study and the impact of subjective evaluations in the construction of an index. Our study aims to provide a measure of integration as much as possible general and objective. More in details, first, we consider some different general aspects of the integration problem related to migrants’ polarization, cultural diversification, social stability, integration in the labor market. Second, we aggregate them in a synthetic linear index, which is rather objective since the weights are computed by only considering the statistical properties of our dataset, i.e. choosing those weights that minimize the information loss in terms of data variances/co-variances.

This paper investigates the effects of monetary policy in presence of heterogeneous consumers. We study the effectiveness (quantitative effects) of monetary policy and equilibrium determinacy properties of a New Keynesian DSGE model where a fraction of households cannot smooth consumption. We show that two-demand regimes can emerge (according to the “slope” of IS curve) and that the main unconventional results, stressed by recent literature, only hold in the unconventional case of an IS curve positively sloped.

In this paper we revisit the case for corporatist agreements in a model where labor markets are unionized, the government controls the fiscal stance, and an independent central bank sets monetary policy. We can then analyze the scope for a political exchange between public expenditure and wage setting choices, showing that corporatism may generate quite different macroeconomic outcomes from the traditional exchange between wage restraint and high public expenditure. In fact our model can easily encompass both first and second-generation corporatist agreements.

In this paper we use a standard multi-union, monopolistic competition model to investigate the qualitative and quantitative responses of inflation and unemployment to monetary policy activism under different institutional arrangements in the labor market, which are defined by the rigidity of nominal wages. We show that the effects of monetary policy on the real economy depend critically on the wage formation regime, and on the ways in which the restrictiveness of policy interacts with product price competition, with union centralization, and with the weight placed on real wage premiums as compared to unemployment in unions’ optimal programs. Our interpretation of the results emphasizes how the posture of monetary policy toward inflation influences the strategic calculations that drive union wage setting behavior in different institutional settings.

This paper generalizes the classical theory of economic policy to a static LQ-strategic context between n players. We show how this generalized version of controllability can profitably be used to deal with policy ineffectiveness issues and Nash equilibrium existence.

We generalize some recent results developed in static policy games with multiple players, to a dynamic context. We find that the classical theory of economic policy can be usefully applied to a strategic context of difference games: if one player satisfies the Golden Rule, then either all other players' policies are ineffective with respect to the dynamic target variables shared with that player; or no Nash Feedback Equilibrium can exist, unless they all share target values for those variables. We extend those results to the case where there are also non-dynamic targets, to show that policy effectiveness (a Nash equilibrium) can continue to exist if some players satisfy the Golden Rule but target values differ between players in the non-dynamic targets. We demonstrate the practical importance of these results by showing how policy effectiveness (a policy equilibrium) can appear or disappear with small variations in the expectations process or policy rule in a widely used model of monetary policy.

This paper studies the institutional design of the coordination of macroeconomic stabilization policies within a monetary union in the framework of linear quadratic differential games. A central role in the analysis plays the partitioned game approach of the endogenous coalition formation literature. The specific policy recommendations in the EMU context depend on the particular characteristics of the shocks and the economic structure. In the case of a common shock, fiscal coordination or full policy coordination is desirable. When asymmetric shocks are considered, fiscal coordination improves the performance but full policy coordination doesn?t produce further gains in policymakers? welfare.

This paper studies corporatism as the outcome of bargaining between the government and a representative labor union. When negotiations between these two parties only relate to macroeconomic stabilization, we show that corporatism can never be beneficial to both parties. As corporatist policies are nevertheless commonly observed in this context, we also discuss in an informal way possible explanations that reconcile the theory with actual observations. The policy implications of these explanations are also discussed.