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Has EMU had any impact on the degree of wage restraint?

We find in cross-sectional investigations that wage restraint is either unchanged or increased following EMU in the vast majority of countries. This contradicts the predictions of a widelycited family of models of labor market bargaining. In those, Germany would have been expected to display the greatest decline in wage restraint post-EMU, and we find no indication of such a decline. The time-series evidence on Italy shows a significant increase in wage restraint after eurozone entry. This pattern is consistent with the models that emphasise the gains from monetary credibility. The eurozone increase in wage restraint is matched by the increase seen in the UK and Sweden after adopting inflation targeting, another means to credibility.
Year of publication:
2006
Authors: Posen, Adam S. ; Popov Gould, Daniel
Publisher: Munich : Center for Economic Studies and Ifo Institute (CESifo)
Subject: Lohnverhandlungen | Lohn | Produktivität | Europäische Wirtschafts- und Währungsunion | EU-Staaten
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Type of publication: Book / Working Paper
Type of publication (narrower categories): Working Paper
Language: English
Other identifiers:
517037890 [GVK]
hdl:10419/25828 [Handle]
Classification: E58 - Central Banks and Their Policies ; E25 - Aggregate Factor Income Distribution ; J58 - Public Policy
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