سیاست های پولی، نرخ ارز و اتحادیه های کارگری در SEE و کشورهای مستقل مشترک المنافع در طول بحران مالی
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|28112||2014||47 صفحه PDF||سفارش دهید||15124 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Economic Systems, Available online 30 June 2014
The objective of this paper is to assess whether the levels of unionization and the rigidity of exchange rates represent a constraint for the monetary policy in South-Eastern Europe and the Commonwealth of Independent States, with a particular focus on the recent economic crisis. Towards that end, a New Keynesian model with price and wage rigidities is used. The results show that monetary policy responded counter-cyclically during the crisis only in countries with weak trade unions and in countries with flexible exchange rates, which indicates that fixed exchange rates and strong trade unions constrain monetary policy in countries in these regions. Also, the findings show that the main driver of price inflation in these countries is not economic activity, but wages, which are affected to a large extent by trade unions. Therefore, trade unions should be active partners in the decision-making processes in these countries.
Different regions in the world faced the recent economic crisis differently. Countries in the Commonwealth of Independent States (CIS) and South-Eastern Europe (SEE), which were growing faster than those in many other regions in the world before the crisis, were severely hit in 2009, but also reverted to growth rapidly in 2010. Still, there are many differences in the growth records between different countries within these groups, which are, to some extent, a reflection of how authorities responded to the crisis. Some may be limited in their ability to respond to negative shocks by prevailing legal and institutional frameworks. For instance, take monetary policy. The ability of a country's central bank to support the domestic economy during crises may be limited by the exchange rate regime: under fixed exchange rates, the efforts of the central bank to support the domestic economy during crises by lowering the interest rate may result in capital outflows and jeopardize the chosen exchange rate regime, bringing more damage than benefit. Five of the SEE and CIS countries maintain a fixed exchange rate, ten have a rather limited flexibility, and only Romania, Serbia, Tajikistan and Turkey can be classified as floaters. That the exchange rate regime might have served as a constraint during the crisis can be seen from the fact that countries with fixed regimes actually increased their interest rates during the crisis instead of lowering them.1 Constraints can also emerge from other sources, such as wage rigidities. Wage rigidities can create inflationary pressures during crises and may force central banks to increase interest rates in order to fight inflationary pressures instead of lowering them in order to support domestic economic activity. That wages might indeed have served as shock propagators rather than shock absorbers in SEE and the CIS during the crisis can be seen from the observation that real wages continued to grow during the crisis in 11 of the 19 SEE and CIS countries. The main source of such wage rigidities are trade unions. SEE and CIS countries continue to have strong trade unions even today, twenty years after the break-up of the socialist system; 41% of the workers are members of unions compared to 26% in the European Union (EU). The objective of this paper is to assess whether the levels of unionization and the rigidity of exchange rates represent a constraint for the monetary policy in South-Eastern Europe and the Commonwealth of Independent States, with a particular focus on the recent economic crisis. In doing so, the research aims to disentangle how the rigidity of the exchange rate and the degree of unionization in these countries potentially affected the conduct of monetary policy and the real economy. To achieve this objective, the study utilizes a version of the New Keynesian model with embedded price and wage rigidities, whereby the monetary policymaker faces trade-offs in stabilizing wage inflation, price inflation and the output gap. Trade unions enter the model through the labor wedge, arising from monopolistic competition in the labor market, i.e., trade unions might affect the equilibrium-restoring mechanism in the wage dynamic. The exchange rate enters the model directly as a term in the monetary policy function. A panel GMM technique was used to estimate the model for 19 SEE and CIS countries over the period from January 2002 to March 2011. The model was estimated for different sub-groups of countries (SEE vs. the CIS, fixed exchange rate vs. floating, strong vs. weak unions) and for different time periods (before the crisis vs. during the crisis2), and the conclusions drawn are based on these comparisons. Since the panel of countries is rather heterogeneous, the results should not be interpreted as valid for all (or any) of the analyzed countries, but only as general results. Several findings emerged from the analysis. First, the output gap is found not to depend on the real interest rate in accordance with the low level of development of the financial markets in these economies. Second, inflation is found not to depend on the output gap but on the wage gap. The insignificance of the output gap may not be a surprising finding in the empirical literature on the New Keynesian Phillips curve (see, e.g., Mihailov et al., 2011) and may be due to its correlation with the wage gap, but since monetary policy in this model affects inflation through the output gap and trade unions through the wage gap, this points to the fact that labor unions may have more power over inflation dynamics in SEE and CIS than monetary authorities. Third, wages depend on the wage gap, which incorporates the influence of the trade unions, but not on the output gap; the lack of sensitivity of wages to economic activity can be explained by the high level of unemployment in SEE and CIS, as the labor supply is high irrespective of the cycle, or by the potentially noisy measure of the output gap. Fourth, monetary policy in countries with weak unions on average supported the economy differently during the crisis than in countries with strong unions. Finally, monetary policy in countries with fixed exchange rates is on average found not to react to domestic economic developments during the crisis, in contrast to countries with flexible rates. The rest of the paper is organized as follows. Section 2 presents certain stylized facts about economic activity, monetary policy and wages in SEE and CIS countries. Section 3 reviews the associated literature, suggesting that the issues the present paper addresses have remained largely unexplored, especially in the literature on developing countries. Section 4 briefly portrays the theoretical model used in the econometric analysis. Section 5 explains the data and the empirical methodology. Section 6 presents the econometric results and offers some explanations. Section 7 summarizes the analysis and discusses policy implications.
نتیجه گیری انگلیسی
The objective of this paper was to analyze the relationship between monetary policy conduct, the exchange rate regime, labor unions and the real economy in SEE and the CIS, and to assess whether the level of unionization and the rigidity of the exchange rate constrained policy responses in these countries during the ongoing economic crisis. To achieve this objective, the paper employed a New Keynesian model with embedded price and wage rigidities. The model was estimated with a panel GMM over the period January 2002 to March 2011. The first group of results indicates that the output gap is not affected by interest rates. Similarly, price inflation depends on wages, but not on the output gap. The finding that changes in the real interest rate do not channel to prices through domestic demand shows that monetary policy has a rather limited effectiveness in SEE and CIS countries. This may be justified by the still underdeveloped financial markets or the excess banking liquidity in these countries, which do not allow for full transmission of monetary policy, but also by the high degree of economic openness (see Gigineishvili, 2011 and Starr, 2005; and Velickovski, 2012). On the other hand, the finding that price inflation is driven mainly by wages sheds important light on how to fight episodes of rising prices–by negotiations with the labor unions or by controlling public sector wages. The second group of results suggests that the real wage gap has explanatory power over wage growth in the majority of cases, differently from the output gap. The insignificance of the output gap might be explained by the relatively high unemployment in these countries, or by the noisiness of the output gap as a measure of the business cycle. The significance of the real wage gap points out that trade unions have influence on the dynamics of wages. In addition, important differences in the wage dynamics during the crisis can be observed between countries with low and high levels of unionization. Crisis drags wages down in countries with low levels of unionization, and weak unions cannot press for wages reverting to equilibrium. On the other hand, strong unions prevent a weak economy from dragging wages down and wages continue to grow during the crisis despite the negative output gap. The third group of results suggests that during the crisis central banks supported the domestic economies only in countries with flexible exchange rates or weak trade unions, which can be interpreted as a constraint that strong unions and fixed exchange rates put on the monetary policy (since the monetary policy cannot support the domestic economy). The finding that strong unions constrain central banks from supporting the economy in times of crisis stresses the need for good cooperation with the labor unions so that future shocks (either to GDP or to inflation) are managed better. This recommendation is in line with Freeman (2013) and Rinne and Zimmermann (2013), who attribute the superior post-crisis performance of the German labor market to the existence of an active dialogue between policymakers and labor unions. The finding that fixed exchange rates serve as constraints to the monetary policy in times of crisis shows that increasing the flexibility of the exchange rate is likely to give more space to the monetary authorities in times of negative demand shocks. Certainly, these recommendations for unionization and the exchange rate regime are only one piece of the puzzle concerning the appropriate exchange rate regime and the optimal degree of unionization in these countries. This is particularly true for exchange rate flexibility, as these countries have a fairly high exchange rate pass-through due to the high openness (see Velickovski and Pugh, 2011), which shows that increased flexibility in the exchange rate might have adverse effects on inflation in these countries. Also, the euroization of household liabilities is very high in many SEE and CIS countries (see Beckmann et al., 2011), which implies that a more flexible exchange rate regime might have negative balance sheet effects, i.e. exchange rate depreciation will increase households’ debt-servicing burden, which might then hurt the real economy. Some limitations of the research are to follow. To begin with, the paper investigated the constraining role of only two factors on monetary policy: the level of unionization and the exchange rate regime. There may be many other factors that constrain monetary policy in certain ways, like the level of euroization, the exchange rate pass-through, fiscal policy, indebtedness, etc., which may be worthwhile to investigate. In addition, if these factors are correlated with the unionization or the exchange rate regime, their omission may imply that our findings should be treated with care. Second, the paper focused only on one monetary policy instrument, i.e. only on the interest rate channel of monetary transmission. However, these countries have underdeveloped financial markets where other instruments may also be very important. Finally, the data on unionization measure the official union membership. However, the actual power of the unions may be different from the official membership. All these aspects point to areas for future research.