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Does Inflation Targeting Matter for Labour Markets? – Some Empirical Evidence

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Author Info

  • Larsson, Anna

    (Department of Economics, Stockholm University, and)

  • Zetterberg, Johnny

    (Trade Union Institute for Economic Research)

Abstract

This paper investigates the impact of inflation targeting on wage formation and unemployment using a panel of 17 OECD countries 1972-2000. Five of the countries included in the study have combined floating exchange rates with explicit inflation targets during the 1990s. Using a theoretical framework for a small open economy, we present simulation results and empirical tests of the model using two different methods. There is some weak evidence that inflation targeting matters for labour markets.

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File URL: http://swopec.hhs.se/fiefwp/papers/WP191.pdf
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Bibliographic Info

Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 191.

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Length: 38 pages
Date of creation: 17 Sep 2003
Date of revision:
Handle: RePEc:hhs:fiefwp:0191

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Related research

Keywords: Wage bargaining; Monetary regime; Equilibrium (un)employment; Inflation target; Exchange rate target;

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References

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  1. Cukierman, Alex & Lippi, Francesco, 1999. "Central bank independence, centralization of wage bargaining, inflation and unemployment:: Theory and some evidence," European Economic Review, Elsevier, vol. 43(7), pages 1395-1434, June.
  2. Bratsiotis, George & Martin, Christopher, 1999. " Stabilisation, Policy Targets and Unemployment in Imperfectly Competitive Economies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(2), pages 241-56, June.
  3. Laurence Ball & Niamh Sheridan, 2003. "Does Inflation Targeting Matter?," NBER Working Papers 9577, National Bureau of Economic Research, Inc.
  4. Holden,S., 1999. "Wage setting under different monetary regimes," Memorandum 12/1999, Oslo University, Department of Economics.
  5. Manfred J.M. Neumann & Jrgen von Hagen, 2002. "Does inflation targeting matter?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 127-148.
  6. Frederic S. Mishkin, 2002. "Does inflation targeting matter? - commentary," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 149-154.
  7. Lars Calmfors, 2001. "Wages and Wage-Bargaining Institutions in the Emu : A Survey of the Issues," CESifo Working Paper Series 520, CESifo Group Munich.
  8. Chorng-Huey Wong & Eric V. Clifton & H. L. Leon, 2001. "Inflation Targeting and the Unemployment-Inflation Trade-off," IMF Working Papers 01/166, International Monetary Fund.
  9. Luca Guerrieri, 2001. "Inflation dynamics," International Finance Discussion Papers 715, Board of Governors of the Federal Reserve System (U.S.).
  10. Cottarelli, C. & Giannini, C., 1997. "Credibility without Rules? Monetary Frameworks in the Post-Bretton Woods Era," Papers 312, Banca Italia - Servizio di Studi.
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Citations

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Cited by:
  1. Lundborg, Per, 2005. "Wage Fairness, Growth and the Utilization of R&D Workers," Working Paper Series 206, Trade Union Institute for Economic Research.
  2. Selén, Jan & Ståhlberg, Ann-Charlotte, 2004. "Wage and Compensation Inequality — How Different?," Working Paper Series 197, Trade Union Institute for Economic Research.
  3. Larsson, Anna, 2006. "Monetary Regimes, Labour Mobility and Equilibrium Employment," Seminar Papers 745, Stockholm University, Institute for International Economic Studies.
  4. Lundborg, Per, 2005. "Wage Theories for the Swedish Labour Market," Working Paper Series 207, Trade Union Institute for Economic Research.

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