Government Fiscal Efforts vs. Labour Union Strikes. Strategic Substitutes or Complements?

Quaderni - Working Paper DSE N° 1013

22 Pages Posted: 24 Jun 2015

See all articles by Massimiliano Castellani

Massimiliano Castellani

Department of Statistics

Luca Fanelli

Universita di Bologna

Marco Savioli

Department of Economics, University of Bologna; University of Salento - Department of Economics and Mathematics and Statistics; University of Bologna - Rimini Center for Economic Analysis (RCEA)

Date Written: June 23, 2015

Abstract

To unveil the strategic interaction between the government and the labour union in a unionised economy, a policy-game model is estimated by cointegrated Vector Autoregressive system using Italian quarterly data (1960-2009) on government budget surplus (fiscal efforts), hours not worked (strikes), unemployment and real wages. The long-run cointegration relationships are interpreted as the players' reaction functions and the long-run equilibrium as the equilibrium of the game. The identification of the long-run cointegration relationships allows indeed to determine if efforts and strikes are strategic complements or strategic substitutes. Finally, speed of long-run adjustment provides insights about the effectiveness of government and labour union strategies.

Keywords: Fiscal efforts, strikes, strategic substitutes, policy-game, speed of adjustment

JEL Classification: E62, J51, C72, C54, C32

Suggested Citation

Castellani, Massimiliano and Fanelli, Luca and Savioli, Marco and Savioli, Marco, Government Fiscal Efforts vs. Labour Union Strikes. Strategic Substitutes or Complements? (June 23, 2015). Quaderni - Working Paper DSE N° 1013, Available at SSRN: https://ssrn.com/abstract=2622033 or http://dx.doi.org/10.2139/ssrn.2622033

Massimiliano Castellani (Contact Author)

Department of Statistics ( email )

piazza teatini 10
rimini, 47921
Italy

Luca Fanelli

Universita di Bologna ( email )

Bologna, 40126
Italy

Marco Savioli

University of Salento - Department of Economics and Mathematics and Statistics ( email )

Piazza Tancredi, n7
Lecce, 73100
Italy

Department of Economics, University of Bologna ( email )

Via Angherà 22
RIMINI, RN 47921
Italy

HOME PAGE: http://sites.google.com/site/msavioli/

University of Bologna - Rimini Center for Economic Analysis (RCEA) ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

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