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Trend inflation as a workers disciplining device in a general equilibrium model

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Author Info
Giovanni Di Bartolomeo
Patrizio Tirelli ()
Nicola Acocella

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Abstract

ient outcomes. Our paper reverses this view: properly designed monetary policies may take advantage of predetermined nominal wages to discipline monopolistic wage setters. This, in turn, requires accepting a non-zero in- flation rate. Discretionary monetary policy is e¤ective when wage setters are non atomistic. In?ation targeting has real e¤ects irrespective of the degree of labor market centralization.

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File URL: http://dipeco.economia.unimib.it/repec/pdf/mibwpaper142.pdf
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Publisher Info
Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 142.

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Length: 25 pages
Date of creation: Jul 2008
Date of revision: Jul 2008
Handle: RePEc:mib:wpaper:142

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Related research
Keywords: inflation bias; discretionary monetary policy; non-zero inflation targeting; unemployment; strategic wage setters;

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Find related papers by JEL classification:
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

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