Amable observes that the analysis of the relationship between different models of capitalism and macroeconomic policy is still largely undeveloped. In a series of papers, David Soskice has proposed that discretionary macroeconomic policy would be suited to liberal market economies whereas less accommodating policies would be complementary to institutional characteristics of non-liberal, coordinated varieties of capitalism. This chapter analyses the channels through which some complementarities between policies and institutions could have an effect on macroeconomic performance and/or social stability. Two simple models are proposed. In the first one, wage earners and price-setting firms’ managers bargain under the constraints defined by the central bank’s reaction to inflation. A more conservative monetary policy may help to stabilise the cooperative equilibrium of the bargaining game and give a low inflation equilibrium as outcome. In the second model, an economy is affected by an adverse macroeconomic shock. In reaction, a certain budget deficit may be decided in order to stabilise output and employment.

This policy decision will affect wages and profits differently, depending on the institutional characteristics of the economy. For certain configurations, the income and status protections given by some institutional arrangements of non-liberal models of capitalism act as automatic stabilisers and are a substitute rather than a complement to anti-cyclical budget policies.