An example of nonlinear endogenous business cycle model: build in the trade union

This paper exemplifies that a trade union may become a causal factor of the business cycle. We construct an overlapping generations (OG) model with a monopoly trade union which bargains about the wage and the employment rate. If substitution between the wage and the employment rate for the trade union is elastic, then the dynamic behavior around the steady state may be oscillatory. (C) 2003 Elsevier B.V. All rights reserved.