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Relative Prices in Monetary Union and Floating

Author

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  • Juhana Vartiainen

Abstract

The setting is a small open economy with an open sector and a sheltered sector. If the unions that operate in each sector coordinate their wage claims within the sector, the choice of monetary regime—monetary union or floating with an inflation target—affects the relative prices of tradables and non–tradables as well as real wages and employment. EMU membership results in lower prices of tradable goods and lower relative wages in the open sector, while opposite results hold for sheltered sector prices and wages. JEL classification: E5; E24; E42; J5; J31

Suggested Citation

  • Juhana Vartiainen, 2002. "Relative Prices in Monetary Union and Floating," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(2), pages 277-287, June.
    • Handle: RePEc:bla:scandj:v:104:y:2002:i:2:p:277-287
    DOI: 10.1111/1467-9442.00286
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    Citations

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    Cited by:

    1. Vincenzo Cuciniello, 2011. "The Welfare Effect of Foreign Monetary Conservatism with Nonatomistic Wage Setters," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(8), pages 1719-1734, December.
    2. Udo Kreickemeier & Frode Meland, 2017. "Non-Traded Goods, Globalization, and Union Influence," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 7, pages 173-201, World Scientific Publishing Co. Pte. Ltd..
    3. Cuciniello, Vincenzo & Lambertini, Luisa, 2016. "Optimal exchange rate flexibility with large labor unions," Journal of International Money and Finance, Elsevier, vol. 63(C), pages 112-136.
    4. Calmfors, Lars & Larsson, Anna, 2009. "Pattern Bargaining and Wage Leadership in a Small Open Economy," Seminar Papers 760, Stockholm University, Institute for International Economic Studies.
    5. Kreickemeier, Udo & Meland, Frode, 2011. "International Trade, Union Wage Premia,and Welfare in General Equilibrium," Working Papers in Economics 04/11, University of Bergen, Department of Economics.
    6. Petteri Juvonen, 2023. "Wage‐setting coordination in a small open economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(1), pages 253-286, January.
    7. Larsson, Anna, 2011. "On labour mobility and the neutrality of money in unionised economies," Economic Modelling, Elsevier, vol. 28(1-2), pages 396-403, January.
    8. Larsson, Anna, 2006. "Monetary Regimes, Labour Mobility and Equilibrium Employment," Seminar Papers 745, Stockholm University, Institute for International Economic Studies.
    9. Lars Calmfors & Anna Larsson Seim, 2013. "Pattern Bargaining and Wage Leadership in a Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(1), pages 109-140, January.

    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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