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International Interdependence and Policy Coordination in Economies with Real and Nominal Wage Rigidity


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  • van der Ploeg, Frederick


The development of the seven main OECD economies during the 1970s and 1980s is discussed. Subsequently, wage equations of the error-correction type for the seven largest OECD economies are estimated. The hypothesis of real wage rigidity cannot be rejected for the French, German, Italian and Japanese economies, but the Canadian, United Kingdom and United States economies display a significant degree of nominal wage rigidity. An analytical two-country model with floating exchange rates, uncovered interest parity, imperfect substitution between home and foreign goods, and sluggish labor markets is then formulated.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 217.

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Date of creation: Dec 1987
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Handle: RePEc:cpr:ceprdp:217

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Keywords: Fiscal Policy; Floating Exchange Rates; Monetary Policy; OECD; Policy Coordination; Supply-Side Policy; Wage Rigidity;


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Cited by:
  1. Klundert, T.C.M.J. van der & Ploeg, F. van der, 1988. "Fiscal policy and finite lives in interdependent economies with real and nominal wage rigidity," Discussion Paper 1988-1, Tilburg University, Center for Economic Research.
  2. Wohltmann, Hans-Werner & Clausen, Volker, 2002. "Foreign price shocks and monetary policy in an asymmetric monetary union," IBES Diskussionsbeiträge 124, University of Duisburg-Essen, Faculty for Economics and Business Administration.
  3. van Tuijl, Martin A. & de Groof, Robert J. & Kolnaar, Ad H. J., 1997. "Fiscal policy and public capital in interdependent economics," Economic Modelling, Elsevier, vol. 14(2), pages 279-300, April.
  4. Wohltmann, Hans-Werner & Winkler, Roland C., 2005. "Monetary Policy Dynamics in Large Oil-Dependent Economies," Economics Working Papers 2005,17, Christian-Albrechts-University of Kiel, Department of Economics.
  5. Ioannis Kaskarelis, 1991. "Output fluctuations with bargained wages and a competitive tradeable goods sector in the economy: Empirical estimates for the group of five, 1970.1 — 1985.4," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 127(1), pages 42-72, March.
  6. Van Der Ploeg, F., 1989. "Fiscal Aspects Of Monetary Integration In Europe," Papers 8930, Tilburg - Center for Economic Research.
  7. Klundert, T.C.M.J. van de & Ploeg, F. van der, 1987. "Wage rigidity and capital mobility in an optimizing model of a small open economy," Research Memorandum 277, Tilburg University, Faculty of Economics and Business Administration.
  8. Ploeg, F. van der, 1990. "Macroeconomic policy coordination during the various phases of economic and monetary integration in Europe," Discussion Paper 1990-61, Tilburg University, Center for Economic Research.
  9. Volker Clausen & Hans-Werner Wohltmann, 2011. "Oil Price Shocks and Cyclical Dynamics in an Asymmetric Monetary Union," Ruhr Economic Papers 0247, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.


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