Uncertainty, Wage Setting and Decision Making in a Monetary Union

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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.

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Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 1485.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1485

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Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, 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

This paper has been announced in the following NEP Reports:

NEP-ALL-2005-08-13 (All new papers)
NEP-CBA-2005-08-13 (Central Banking)
NEP-FMK-2005-08-13 (Financial Markets)
NEP-MAC-2005-08-13 (Macroeconomics)
NEP-MON-2005-08-13 (Monetary Economics)

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Rudiger Dornbusch & Carlo A. Favero & Francesco Giavazzi, 1998. "The Immediate Challenges for the European Central Bank," NBER Working Papers 6369, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Other versions:
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Other versions:
- Benigno, Pierpaolo, 2001. "Optimal Monetary Policy in a Currency Area," CEPR Discussion Papers 2755, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Ellen E. Meade & D. Nathan Sheets, 2002. "Regional Influences on U.S. Monetary Policy: Some Implications for Europe," CEP Discussion Papers 0523, Centre for Economic Performance, LSE. [Downloadable!]
Other versions:
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Paul De Grauwe & Marc-Alexandre Senegas, 2003. "Monetary Policy in EMU when the Transmission is Asymmetric and Uncertain," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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Other versions:
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