NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Romain Duval

Research Department
International Monetary Fund
700 19th Street, N.W.
Washington, D.C. 20431, U.S.A.

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NBER Working Papers and Publications

October 2017Market Reforms at the Zero Lower Bound
with Matteo Cacciatore, Giuseppe Fiori, Fabio Ghironi: w23960
This paper studies the impact of product and labor market reforms when the economy faces major slack and a binding constraint on monetary policy easing---such as the zero lower bound. To this end, we build a two-country model with endogenous producer entry, labor market frictions, and nominal rigidities. We find that while the effect of market reforms depends on the cyclical conditions under which they are implemented, the zero lower bound itself does not appear to matter. In fact, when carried out in a recession, the impact of reforms is typically stronger when the zero lower bound is binding. The reason is that reforms are inflationary in our structural model (or they have no noticeable deflationary effects). Thus, contrary to the implications of reduced-form modeling of product and labo...

Published: Matteo Cacciatore & Romain Duval & Giuseppe Fiori & Fabio Ghironi, 2017. "Market Reforms at the Zero Lower Bound," IMF Working Papers, vol 17(215).

March 2016Market Reforms in the Time of Imbalance
with Matteo Cacciatore, Giuseppe Fiori, Fabio Ghironi: w22128
We study the consequences of product and labor market reforms in a two-country model with endogenous producer entry and labor market frictions. We focus on the role of business cycle conditions and external constraints at the time of reform implementation (or of a credible commitment to it) in shaping the dynamic effects of such policies. Product market reform is modeled as a reduction in entry costs and takes place in a non-traded sector that produces services used as input in manufacturing production. Labor market reform is modeled as a reduction in firing costs and/or unemployment benefits. We find that business cycle conditions at the time of deregulation significantly affect adjustment. A reduction of firing costs entails larger and more persistent adverse short-run effects on employm...

Published: Matteo Cacciatore & Romain Duval & Giuseppe Fiori & Fabio Ghironi, 2016. "Market Reforms in the Time of Imbalance," Journal of Economic Dynamics and Control, . citation courtesy of

December 2015Short-Term Pain for Long-Term Gain: Market Deregulation and Monetary Policy in Small Open Economies
with Matteo Cacciatore, Giuseppe Fiori, Fabio Ghironi: w21784
This paper explores the effects of labor and product market reforms in a New Keynesian, small open economy model with labor market frictions and endogenous producer entry. We show that it takes time for reforms to pay off, typically at least a couple of years. This is partly because the benefits materialize through firm entry and increased hiring, both of which are gradual processes, while any reform-driven layoffs are immediate. Some reforms—such as reductions in employment protection—increase unemployment temporarily. Implementing a broad package of labor and product market reforms minimizes transition costs. Importantly, reforms do not have noticeable deflationary effects, suggesting that the inability of monetary policy to deliver large interest rate cuts in their aftermath—either beca...

Published: Matteo Cacciatore & Romain Duval & Giuseppe Fiori & Fabio Ghironi, 2016. "Short-term pain for long-term gain: market deregulation and monetary policy in small open economies," Journal of International Money and Finance, vol (). citation courtesy of

 
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