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Monetary accommodation and unemployment: Why central bank transparency matters

Author

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  • Eleftherios Spyromitros
  • Blandine Zimmer

Abstract

Recent contributions have shown that in the presence of strategic interactions be- tween non atomistic unions and the central bank, an accommodating monetary policy rule may increase equilibrium unemployment. This note demonstrates that this result can be reversed considering the case where the central bank is not fully transparent concerning its reaction to wage decisions.

Suggested Citation

  • Eleftherios Spyromitros & Blandine Zimmer, 2007. "Monetary accommodation and unemployment: Why central bank transparency matters," Working Papers of BETA 2007-27, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2007-27
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    File URL: http://beta.u-strasbg.fr/WP/2007/2007-27.pdf
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    References listed on IDEAS

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    1. Gruener Hans Peter & Hayo Bernd & Hefeker Carsten, 2009. "Unions, Wage Setting and Monetary Policy Uncertainty," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-25, October.
    2. Fabrizio Coricelli & Alex Cukierman & Alberto Dalmazzo, 2006. "Monetary Institutions, Monopolistic Competition, Unionized Labor Markets and Economic Performance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 39-63, March.
    3. Holden, Steinar, 2005. "Monetary regimes and the co-ordination of wage setting," European Economic Review, Elsevier, vol. 49(4), pages 833-843, May.
    4. David Soskice & Torben Iversen, 2000. "The Nonneutrality of Monetary Policy with Large Price or Wage Setters," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(1), pages 265-284.
    5. Soskice, David & Iversen, Torben, 1998. "Multiple Wage-Bargaining Systems in the Single European Currency Area," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 14(3), pages 110-124, Autumn.
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    Citations

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    Cited by:

    1. Sánchez, Marcelo, 2012. "Inflation uncertainty and unemployment uncertainty: Why transparency about monetary policy targets matters," Economics Letters, Elsevier, vol. 117(1), pages 119-122.
    2. Christoph S. Weber, 2020. "The unemployment effect of central bank transparency," Empirical Economics, Springer, vol. 59(6), pages 2947-2975, December.
    3. Meixing Dai, 2016. "Static And Dynamic Effects Of Central Bank Transparency," Bulletin of Economic Research, Wiley Blackwell, vol. 68(1), pages 55-78, January.
    4. Sánchez, Marcelo, 2013. "Monetary accommodation, imperfect central bank transparency and optimal delegation," Economics Letters, Elsevier, vol. 120(3), pages 392-396.
    5. Stephanos Papadamou & Vangelis Arvanitis, 2015. "The effect of the market-based monetary policy transparency index on inflation and output variability," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(1), pages 105-124, January.
    6. Sánchez, Marcelo, 2011. "Monetary strictness and labour market outcomes under incomplete transparency," Research in Economics, Elsevier, vol. 65(2), pages 95-99, June.
    7. Meixing Dai & Qiao Zhang, 2017. "Central bank transparency under the cost channel," International Finance, Wiley Blackwell, vol. 20(2), pages 189-209, June.
    8. Ma, Yong & Li, Shushu, 2015. "Bayesian estimation of China's monetary policy transparency: A New Keynesian approach," Economic Modelling, Elsevier, vol. 45(C), pages 236-248.

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    More about this item

    Keywords

    Monetary regime; Wage setting; Central bank transparency.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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