Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82883
Authors: 
Holmlund, Bertil
Kolm, Ann-Sofie
Year of Publication: 
1999
Series/Report no.: 
Working Paper, Department of Economics, Uppsala University 1999:7
Abstract: 
The paper examines policy externalities between imperfectly competitive open economies where unemployment prevails in general equilibrium. We develop a two-country and two-sector model with monopolistic competition in the goods market and wage bargaining in the labor market. Policy externalities operate through the real exchange rate and economic integration is modeled as a reduction in trade costs. We explore how market integration influences policy spillovers, employment and real wages. We also examine how national and supranational commodity tax policies affect sectoral and total employment. Finally, we characterize optimal commodity taxes with non-cooperative and cooperative policies and offer some rough estimates of the welfare gains from policy coordination, using a calibrated version of the model.
Subjects: 
Economic integration
imperfect competition
wage determination
policy cooperation
JEL: 
D43
E61
F15
J23
J64
Document Type: 
Working Paper

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