Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/39559
Authors: 
Cavallari, Lilia
Year of Publication: 
2001
Series/Report no.: 
ZEI working paper B 11-2001
Abstract: 
Building on a micro-founded model of a two region-world economy in the tradition of the new open economy literature, this paper analyses the strategic interaction of large wage-setters and the central bank when switching from a regime of uncoordinated national monetary policies to a monetary union. The establishment of a monetary union is shown to favour wage restraint, provided the uni…ed central bank is not too conservative. Wage discipline may reduce equilibrium in‡ation in a monetary union relative to the one under uncoordinated national monetary policies when wage setting is centralised across member countries.
Subjects: 
monetary union
wage bargaining
inflationary bias
JEL: 
E5
F4
Document Type: 
Working Paper

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