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The welfare effect of foreign monetary conservatism with non-atomistic wage setters

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  • Vincenzo Cuciniello

    ()
    (Bank of Italy)

Abstract

This paper extends the closed economy analysis of strategic interaction between labor unions and the monetary authority in Lippi (REStud 2003) to a two-country open economy framework. It sheds light on the real effect of foreign central bank conservatism, which—through a strategic mechanism that operates via the terms of trade between the two independent monetary policy makers—entails wage moderation. The impact of domestic central bank conservatism hinges instead on the combination of three strategic effects.

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File URL: http://www.bancaditalia.it/pubblicazioni/econo/temidi/td11/td810_11/en_td_810/en_tema_810.pdf
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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 810.

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Date of creation: Jun 2011
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Handle: RePEc:bdi:wptemi:td_810_11

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Web page: http://www.bancaditalia.it
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Keywords: foreign central bank conservatism; centralized wage setting; open-economy macro;

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Cited by:
  1. Cuciniello, Vincenzo, 2013. "Large labour unions and terms-of-trade externality," Economics Letters, Elsevier, vol. 120(1), pages 135-138.

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