Wage and Public Expenditure Setting in a Monetary Union

European countries have progressively integrated from the point of view of trade and investment and have a common currency now. By contrast, labour market and fiscal institutions have largely retained their national status. The aim of this paper is threefold. First, the effects of trade union international cooperation to internalise external effects stemming from wage setting at a national level are examined. Second, the paper investigates the likelihood for governments of internalising macroeconomic spillovers deriving from national-oriented public expenditure. Third, the interactions between fiscal and monetary authorities are considered.