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Unemployment, Labour-Market Reform and Monetary Union

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Author Info
Calmfors, Lars () (Institute for International Economic Studies, Stockholm University)
Abstract

The paper analyses various mechanism through which monetary union in Europe may affect unemployment. The focus is on the political incentives for labour-market reform. There will be more reform outside than inside the EMU to the extent that a national inflation bias can be reduced. But if there is a precautionary motive for low average unemployment in order to reduce the utility cost of macroeconomic variability, there could be more reform in a monetary union. Labour-market reform to increase wage flexibility as a substitute for domestic monetary policy and transition costs of reform are also analysed. The net effect of monetary union on unemployment is ambiguous.

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Publisher Info
Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 639.

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Length: 35 pages
Date of creation: 01 Apr 1998
Date of revision:
Handle: RePEc:hhs:iiessp:0639

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Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
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Related research
Keywords: monetary union; labour-market reform; equilibrium unemployment; discretionary monetary policy; asymmetric shocks;

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Find related papers by JEL classification:
E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Sibert, Anne & Sutherland, Alan, 1997. "Monetary Regimes and Labour Market Reform," CEPR Discussion Papers 1731, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121. [Downloadable!] (restricted)
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  3. Fatás, Antonio, 1997. "EMU: Countries or Regions? Lessons from the EMS Experience," CEPR Discussion Papers 1558, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November. [Downloadable!] (restricted)
  5. 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. [Downloadable!] (restricted)
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  6. Charles R. Bean, 1994. "The role of demand management policies in reducing unemployment," Proceedings, Federal Reserve Bank of Kansas City, issue Jan, pages 99-167.
  7. C Bean, 1994. "The Role in Demand Management Policies in Reducing Unemployment," CEP Discussion Papers dp0222, Centre for Economic Performance, LSE.
  8. George A. Akerlof & William R. Dickens & George L. Perry, 1996. "The Macroeconomics of Low Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1996-1), pages 1-76. [Downloadable!]
  9. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August. [Downloadable!] (restricted)
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  10. Saint-Paul, Gilles, 1995. "A Framework for Analysing the Political Support for Active Labour Market Policy," CEPR Discussion Papers 1205, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Agell, Jonas & Calmfors, Lars & Jonsson, Gunnar, 1996. "Fiscal policy when monetary policy is tied to the mast," European Economic Review, Elsevier, vol. 40(7), pages 1413-1440, August. [Downloadable!] (restricted)
  12. Alberto Alesina & Vittorio Grilli, 1991. "The European Central Bank: Reshaping Monetary Politics in Europe," NBER Working Papers 3860, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Lindbeck, A, 1996. "The West European Employment Problem," Papers 616, Stockholm - International Economic Studies.
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  14. Gordon, Robert J, 1996. "Macroeconomic Policy in the Presence of Structural Maladjustment," CEPR Discussion Papers 1493, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  15. Ball, Laurence & Romer, David, 1990. "Real Rigidities and the Non-neutrality of Money," Review of Economic Studies, Blackwell Publishing, vol. 57(2), pages 183-203, April. [Downloadable!] (restricted)
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  16. Saint-Paul, G., 1993. "On the Political Economy of Labor Market Flexibility," DELTA Working Papers 93-02, DELTA (Ecole normale supérieure).
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  17. Gruner, Hans Peter & Hefeker, Carsten, 1999. " How Will EMU Affect Inflation and Unemployment in Europe?," Scandinavian Journal of Economics, Blackwell Publishing, vol. 101(1), pages 33-47, March. [Downloadable!] (restricted)
  18. Wright, Randall, 1986. "The redistributive roles of unemployment insurance and the dynamics of voting," Journal of Public Economics, Elsevier, vol. 31(3), pages 377-399, December. [Downloadable!] (restricted)
  19. Coe, David T & Snower, Dennis J., 1997. "Policy Complementarities: The Case for Fundamental Labour Market Reform," CEPR Discussion Papers 1585, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  20. Persson, Torsten & Tabellini, Guido, 1993. "Designing institutions for monetary stability," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 53-84, December. [Downloadable!] (restricted)
  21. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June. [Downloadable!] (restricted)
  22. Svensson, Lars E O, 1997. "Optimal Inflation Targets, "Conservative" Central Banks, and Linear Inflation Contracts," American Economic Review, American Economic Association, vol. 87(1), pages 98-114, March. [Downloadable!] (restricted)
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  23. Cukierman, Alex & Lippi, Francesco, 1998. "Central Bank Independence, Centralization of Wage Bargaining, Inflation and Unemployment - Theory and Evidence," CEPR Discussion Papers 1847, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  24. Fredriksson, Peter, 1997. "The Political Economy of Public Employment Programs," Working Paper Series 1997:6, Uppsala University, Department of Economics.
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Wyplosz, Charles, 1999. "Towards A More Perfect EMU," CEPR Discussion Papers 2252, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Jordahl, Henrik & Laséen, Stefan, 1999. "Central Bank Conservatism and Labor Market Reform," Working Paper Series 1999:23, Uppsala University, Department of Economics. [Downloadable!]
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  3. M. Burda, . "European Labor Markets and the Euro: How Much Flexibility Do We Really Need?," Sonderforschungsbereich 373 1999-41, Humboldt Universitaet Berlin.
    Other versions:
  4. Maurice Obstfeld, 2000. "EMU: Ready, or Not?," International Trade 0003001, EconWPA. [Downloadable!]
    Other versions:
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