National prices and wage setting in a currency union

Existing work on wage bargaining (as exemplified by Cukierman and Lippi, 2001) typicallypredicts more aggressive wage setting under monetary union. This insight has not beenconfirmed by the EMU experience, which has been characterised by wage moderation,thereby eliciting criticism from Posen and Gould (2006). The present paper formulates amodel where, realistically, trade unions set wages with national prices in mind, deviatingfrom Cukierman and Lippi (2001) who postulate that wages are set having area-wide pricesin mind. For reasonable ranges of parameter values (and macroeconomic shocks), simulationsshow that a monetary union is found to elicit real wages that...

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Year of publication:	2009-05-29
Authors:	Sánchez, Marcelo
Institutions:	European Central Bank
Published in:	Working papers published in 2009 ECB Working Paper Series No 1058, May 2009
Subject:	Geldpolitik \| Gewerkschaft \| trade union \| Arbeitslosigkeit \| unemployment \| Inflation \| Währungsunion

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Extent:	1069547.52 bytes 61 p. application/pdf
Type of publication:	Book / Working Paper
Language:	English
ISSN:	1725-2806
Classification:	E50 - Monetary Policy, Central Banking and the Supply of Money and Credit. General ; E58 - Central Banks and Their Policies ; J50 - Labor-Management Relations, Trade Unions, and Collective Bargaining. General ; J51 - Trade Unions: Objectives Structure, and Effects ; Management of financial services: stock exchange and bank management science (including saving banks) ; Individual Reports, Studies ; Global Resources
Source:	USB Cologne (business full texts)

Persistent link: https://www.econbiz.de/10005866574