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By Doran R., Dou Z.-L., Gilbert G. (eds.)

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Extra info for Automorphic Forms, Automorphic Representations, and Arithmetic, Part 1

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Therefore, there is no direct access for centralized decisions on wage formation. In highly coordinated or centralized bargaining systems, these opportunities are more accessible since one single actor or a small number of actors have at least some control over how wages will develop. The Western European countries in this book have wage bargaining systems that are sufficiently coordinated for governments to possess the capacity to influence wage bargaining behaviour. There is therefore an incentive for governments to use centralized wage bargaining structures in order to exert a higher degree of control over wages.

In the neo-classical world of economic policy, monetary and fiscal policies are the two main instruments a government can and should employ in order to strengthen economic stabilization during the business cycle. Wages and, in particular, the assumptions about the rigidity of wages have been important factors when assessing the potential of fiscal and monetary policies respectively. The Keynesian revolution in economic thought held out the prospect of full employment secured through the creation of aggregate demand by public authorities, rather than through reduction of costs by private enterprises under the pressure of competition.

Rather than let credible monetary policies take effect by themselves, governments have an incentive to use restrictive monetary policies and interventionist wage policies in tandem if wage bargaining institutions are not in themselves sufficiently responsive. Credible monetary policies ensure low inflation; negotiating wage restraint can help to smooth the negative effects of otherwise harsh disinflationary measures. The credibility of the government: from political exchange to imposing a new policy paradigm36 In the neo-corporatist literature, the political relationship between trade unions and governments has been predominantly described by the notion of political exchange (Pizzorno 1978).

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