Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264655 
Authors: 
Year of Publication: 
2002
Series/Report no.: 
Working Paper No. 63
Publisher: 
Oesterreichische Nationalbank (OeNB), Vienna
Abstract: 
The paper studies the determinants of unemployment in a two-country model, where real wages are the outcome of the strategic interaction between various institutional players (firms, unions, central banks). We show that: (i) the results derived in the recent literature on this topic are not generally robust against the introduction of openness; (ii) the shape of the Calmfors- Driffill curve not only depends on a country's own centralization of wage-bargaining (CWB) but rather on home and foreign characteristics; (iii) the model challenges the established belief that a shift to a monetary union (MU) will (negatively) affect unemployment in all member countries by fundamentally changing the nature of strategic interactions. Under certain assumptions our open-economy model suggests that the formation of a MU has no effect whatsoever on structural unemployment.
Subjects: 
Wage-Setting
Unemployment
Monetary Union
JEL: 
E50
E58
F41
F42
J51
Document Type: 
Working Paper

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