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This paradigm is based not upon transitory shocks but rather
upon low-frequency shifts between steady states. Each steady state is characterized by
one of two labor bargaining regimes, individual or collective, and is easily understood
from first principles. A shift from individual to collective bargaining presents as a recession,
and involves declines in output and asset prices, accompanied by increases in
unemployment and real wages...
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A shift from individual to collective bargaining presents as a recession,
and involves declines in output and asset prices, accompanied by increases in
unemployment and real wages. Conversely, a shift from collective to individual bargaining
presents as an expansion, with increases in output and asset prices, accompanied
by a decrease in unemployment...
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