CORPORATISM, MONETARY-POLICY AND MACROECONOMIC PERFORMANCE - A SIMPLE GAME-THEORETIC ANALYSIS

The effects of corporatism on inflation and output are analysed in a model of a game between a government and a union. This model allows consideration of aspects of corporatism other than centralisation of wage bargaining and permits monetary policy to be endogenised. Corporatist attitudes on the part of the union have beneficial effects on economic performance, provided the game is played noncooperatively with simultaneous moves, though the nature of their impact depends critically on the government's preferences. If the government leads, certain forms of corporatism can be inflationary. Cooperative play reduces inflation but has an ambiguous effect on output.