This paper assesses the effects of combining fiscal austerity with flexibilization policies aimed at reducing labour costs and increasing competitiveness. Core to our analysis is a global perspective where the aggregation problem is fully taken into account. We derive a stylized macroeconomic framework of distributive and demand dynamics. We show that even in export-led regimes, after considering global feedbacks, flexibilization policies do not lead to higher income and employment. Rather, the end result is contractionary. Over time, the world economy is essentially wage-led and responds positively to coordinated Keynesian stimuli.
Working Papers
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Economic Analysis and Policy
Economic Analysis and Policy
Economic Analysis and Policy
Economic Analysis and Policy
Economic Analysis and Policy
Social Development, Economic Analysis and Policy
Economic Analysis and Policy
Economic Analysis and Policy
Economic Analysis and Policy
Economic Analysis and Policy
Economic Analysis and Policy