Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88122
Authors: 
Busl, Claudia
Seymen, Atılım
Year of Publication: 
2013
Series/Report no.: 
ZEW Discussion Papers 13-097
Abstract: 
While a widespread consensus exists among macroeconomists that the German labour market reforms in 2003-2005 have successfully contributed to the decline of the unemployment rate, critics claim that the reforms led to wage restraint and consequently consumption dampening accompanied by beggar-thy-neighbour effects, harming Germany's trade partners. We check up on the validity of these arguments by means of a two-country DSGE model featuring intra-industry trade and labour market frictions. Our results suggest that the disproportional growth of GDP (labour productivity) in comparison to consumption (wages) are only partially driven by the reforms. However, we do not find that the reforms contribute to Germany's trade surplus and cause negative spillovers to trading partners in terms of output and employment.
Subjects: 
labour market reforms
search and matching
spillover
dynamic stochastic general equilibrium models
JEL: 
E24
E61
E65
F42
J38
J63
Document Type: 
Working Paper

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