TITLE

Labour Markets and Monetary Union: A Strategic Analysis

AUTHOR(S)
Cukierman, Alex; Lippi, Francesco
PUB. DATE
July 2001
SOURCE
Economic Journal;Jul2001, Vol. 111 Issue 473
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This paper shows that the effects of a monetary union depend on several labour market features. In particular, the switch from national monetary policies to a common monetary policy usually affects both inflation and unemployment, even when all structural parameters of the economy and of unions' and policymakers' preferences remain the same. The benchmark case of a monetary union between identical countries suggests that the switch to a monetary union is likely to make labour unions more aggressive, increasing unemployment. Qualifications to this result are provided under alternative institutional scenarios, like cross-country asymmetries, (pre-union) ERM membership and wage leadership.
ACCESSION #
4890070

 

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