For a long time it was believed that a hierarchy is very suited for executing policies. However, the principal-agent model has created doubts about this belief. The present column presents an extensive explanation of this model, which has led to a revaluation of market operations, also in the public sector. Behavioural economics suggests several improvements. Finally, the mathematical model is described in detail, at least for the case of the unobservable effort of the agent .... Read more
15-02-2020: Reputation signals in the economy
Author: E.A. Bakkum
Many economic transactions have a time asymmetry, which forces the actors to trust each other. Trust is in the last resort built on a reputation. The present columns shows that actors signal their reputation to each other by choosing a certain behaviour. After a general introduction, based on the ideas of the sociologist J.S. Coleman, the signalling is illustrated with examples of the behaviour in oligopolies, of the policy of the central bank, and of applicants on the labour market .... Read more
28-01-2020: A new-Keynesian model of the monetary policy
Author: E.A. Bakkum
Traditionally the monetary policy has been analyzed wit the AS-AD model. However, nowadays a new-Keynesian model is preferred, which is based on the Phillips curve and on the aggregated demand. The present column describes this model. Here, variants are also discussed, namely the Barro-Gordon model and a model with an infinite time horizon. The autonomy of the Central Bank is studied. It turns out that empirically the personal happiness is affected by inflation and unemployment .... Read more
14-01-2020: The mission of the trade union movement (3)
Author: E.A. Bakkum
Various columns in the Gazette have tried to describe the mission of the trade union movement. The present column studies the mission, that the Dutch trade union movement developed during the seventies of the last century. First, the then economic situation is analyzed, and the socio-cultural spirit of the time is sketched. The latter is illustrated with several characteristic biographies. Finally, the propaganda in industries and the then union actions are explained .... Read more
28-12-2019: The substitution of wage and leisure time
Author: E.A. Bakkum
The neoclassical theory assumes that the wage and the leisure time are more or less substitutes. This column explains, that according to R. Layard the substitution is not quite rational, due to human rivalry and habituation. Furthermore, a model of collective bargaining is presented, with the wage and leisure time as stakes. It reminds of the work of Sam de Wolff. Finally, it is discussed that in happiness economics, Van Praag analyzes the human preferences by means of the probit method .... Read more