Pissarides, Christopher (2003) Unemployment in Britain : a European success story. CEP discussion paper; CEPDP0600, 600. Centre for Economic Performance, London School of Economics and Political Science, London, UK.
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Unemployment in Britain has fallen from high European-style levels to US levels. I argue that the key reasons are first the reform of monetary policy, in 1993 with the adoption of inflation targeting and in 1997 with the establishment of the independent Monetary Policy Committee, and second the decline of trade union power. I interpret the reform of monetary policy as an institutional change that reduced inflationary expectations in the face of falling unemployment. The decline of trade union power contributed to the control of wage inflation. The major continental economies failed to match UK performance because of institutional rigidities, despite low inflation expectations.
|Item Type:||Monograph (Discussion Paper)|
|Additional Information:||© 2003 Christopher A. Pissarides|
|Uncontrolled Keywords:||unemployment in UK, monetary policy, Beveridge curve, Phillips curve|
|Library of Congress subject classification:||H Social Sciences > HD Industries. Land use. Labor|
|Journal of Economic Literature Classification System:||E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J64 - Unemployment: Models, Duration, Incidence, and Job Search
|Sets:||Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
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