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Labor market regimes and the effects of monetary policy

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Author Info
Acocella, Nicola
Di Bartolomeo, Giovanni
Hibbs Jr., Douglas A.

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Abstract

In this paper, we evaluate the effects of monetary policy on inflation and unemployment under different institutional arrangements in the labor market. We show that the effects of monetary policy on the real economy depend critically on the wage formation regime, and on the ways in which the restrictiveness of policy interacts with product price competition, wage setting centralization and the utility weight unions place on real wage premiums as compared to unemployment. Our analysis emphasizes how the posture of monetary policy toward inflation influences the strategic calculations driving unions' wage setting behavior in different institutional environments.

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Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 30 (2008)
Issue (Month): 1 (March)
Pages: 134-156
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Handle: RePEc:eee:jmacro:v:30:y:2008:i:1:p:134-156

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Web page: http://www.elsevier.com/locate/inca/622617

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  5. Lars Calmfors, 1993. "Centralisation of Wage Bargaining and Macroeconomic Performance: A Survey," OECD Economics Department Working Papers 131, OECD, Economics Department. [Downloadable!]
  6. Nicola Acocella & Giovanni Di Bartolomeo, 2002. "Non-neutrality of monetary policy in policy games," Macroeconomics 0207002, EconWPA. [Downloadable!]
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  7. Cubitt, Robin P, 1997. " Stagflationary Bias and the Interaction of Monetary Policy and Wages in a Unionized Economy," Public Choice, Springer, vol. 93(1-2), pages 165-78, October. [Downloadable!] (restricted)
  8. Coricelli, Fabrizio & Cukierman, Alex & Dalmazzo, Alberto, 2001. "Economic Performance and Stabilization Policy in a Monetary Union with Imperfect Labour and Goods Markets," CEPR Discussion Papers 2745, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  12. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects Of Regulation And Deregulation In Goods And Labor Markets," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 879-907, August. [Downloadable!] (restricted)
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  13. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August. [Downloadable!] (restricted)
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  14. Lippi, F., 2000. "Strategic Monetary Policy with Non-Atomistic Wage-Setters," Papers 374, Banca Italia - Servizio di Studi.
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  15. Canzoneri, Matthew B, 1985. "Monetary Policy Games and the Role of Private Information," American Economic Review, American Economic Association, vol. 75(5), pages 1056-70, December. [Downloadable!] (restricted)
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  16. R.C.M.H. Douven, 2002. "Equilibrium Rates and Wage Flexibility in Europe," Economics Working Papers 010, European Network of Economic Policy Research Institutes. [Downloadable!]
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  18. Jerger, Jurgen, 2002. "Socially optimal monetary policy institutions," European Journal of Political Economy, Elsevier, vol. 18(4), pages 761-781, November. [Downloadable!] (restricted)
  19. Gali, Jordi, 1995. "Product diversity, endogenous markups, and development traps," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 39-63, August. [Downloadable!] (restricted)
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  20. Acocella, Nicola & Ciccarone, Giuseppe, 1997. " Trade Unions, Nonneutrality and Stagflation," Public Choice, Springer, vol. 91(2), pages 161-78, April. [Downloadable!] (restricted)
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  23. repec:cup:cbooks:9780521264440 is not listed on IDEAS
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  34. Cukierman, Alex & Lippi, Francesco, 2001. "Labour Markets and Monetary Union: A Strategic Analysis," Economic Journal, Royal Economic Society, vol. 111(473), pages 541-65, July. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marcelo Sánchez, 2008. "Monetary stabilisation in a currency union of small open economies," Working Paper Series 927, European Central Bank. [Downloadable!]
  2. Acocella, Nicola & Di Bartolomeo, Giovanni & Pauwels, Wilfried, 2007. "Is there any scope for corporatism in stabilization policies?," MPRA Paper 3584, University Library of Munich, Germany. [Downloadable!]
  3. Philip Du Caju & Erwan Gautier & Daphne Momferatou & Melanie Ward-Warmedinger, 2008. "Institutional features of wage bargaining in 23 European countries, the US and Japan," Working Paper Series 974, European Central Bank. [Downloadable!]
    Other versions:
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