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Uncertainty, Wage Setting and Decision Making in a Monetary Union

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  • Carsten Hefeker

Abstract

The enlargement of the European Monetary Union is likely to lead to an increase in uncertainty regarding the transmission of monetary policy for the larger union. Adding new members to the central bank council will in addition imply that the policy reaction of the enlarged council will be uncertain in the initial period. The paper considers the influence of both types of uncertainty on wage-setting behavior in the larger monetary union and its effects on unemployment. In light of these effects, I also derive implications for the adequate structure of the central bank.

Suggested Citation

  • Carsten Hefeker, 2005. "Uncertainty, Wage Setting and Decision Making in a Monetary Union," CESifo Working Paper Series 1485, CESifo.
    • Handle: RePEc:ces:ceswps:_1485
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    Cited by:

    1. Gonzales-Eiras, Martín & Niepelt, Dirk, 2004. "Sustaining Social Security," Seminar Papers 731, Stockholm University, Institute for International Economic Studies.
    2. Carsten Hefeker, 2006. "The monetary policy consequences of enlargement," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(4), pages 29-34, December.
    3. Carsten Hefeker, 2006. "The monetary policy consequences of enlargement," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(04), pages 29-34, December.
    4. Irena Radović, 2009. "Challenges for Monetary Policy in the Enlarged European Monetary Union," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(1), pages 95-110, March.

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    More about this item

    Keywords

    monetary policy uncertainty; wage setting; European Central Bank; Euro area; accession countries;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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