Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/25961 
Authors: 
Year of Publication: 
2007
Series/Report no.: 
CESifo Working Paper No. 1916
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
A fixed exchange rate regime eliminates one degree of freedom in absorbing macroeconomic shocks. Therefore, there is a call for higher labor market flexibility in countries which are members of the monetary union or those which intend to join the monetary union. Focusing on the cross-country analysis of labor markets in the enlarged European Union over 1995- 2004, this paper aims to assess empirically the role of aggregate wages as a correction mechanism for dealing with economic disturbances. We apply classical time series/panel, Bayesian, and cointegration techniques to determine the extent to which aggregate wages can accommodate shocks in the economy.
JEL: 
E24
E52
C22
C33
P20
Document Type: 
Working Paper
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