Please use this identifier to cite or link to this item:
Pissarides, Christopher A.
Year of Publication: 
Series/Report no.: 
CESifo Working Paper 981
Unemployment in the United Kingdom has fallen from high European-style levels to US levels. I argue that the key reasons are the reform of monetary policy, in 1993 with the adoption of inflation targeting and in 1997 with the establishment of the independent Monetary Policy Committee, and second the decline of trade union power. I interpret the reform of monetary policy as an institutional change that reduced inflationary pressures in the face of falling unemployment. The decline of trade union power contributed to the control of wage inflation. The major continental economies failed to match UK performance because of institutional rigidities, despite low inflation expectations.
Document Type: 
Working Paper

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.