Comment on L. Calmfors, “Employment Policies, Wage Formation and Trade Union Behavior in a Small Open Economy”

Abstract

Calmfors describes an open economy with a strong trade union and highly centralized wage negotiations. These are features which on the whole fit both Sweden and Norway very well, although a few objections will be raised below. The paper is therefore a valuable contribution to our understanding of the functioning of economies such as Norway and Sweden, and probably several other European countries. Although Calmfors’ analysis is carried out within the context of a particular macroeconomic model, most of his conclusions are valid for a wide range of specifications of an open economy.